French retail group Auchan withdraws from China: the company sells its Chinese division Sun Art to Alibaba for 3 billion euros. Both groups have been working closely together there for some time.
“Seize new opportunities”
The Chinese exit of Auchan is not a big surprise: when the French group transferred the operational management of its Chinese division Sun Art Retail Group to its Taiwanese partner RT-Mart last year, it was already seen as the announcement of a gradual withdrawal. A year earlier, Alibaba had already taken a 36.16% stake in Auchan’s Chinese leg.
Now, according to the press release, both business partners together have established that the Chinese market is “very specific”. That is why Auchan has accepted Alibaba’s bid to take over Sun Art in its entirety. The deal concerns a chain of 484 hypermarkets and 150,000 employees, market leader in Chinese food retail. With this acquisition, Alibaba instantly becomes a large physical retailer in the country. It is not the first time that a French retailer has had to give up in China: last year, Carrefour had to throw in the towel as well.
Thanks to this sale, Auchan Retail will be able to further reduce its debts and seize new opportunities to develop in new countries, says the communiqué. The group now wants to roll out its Auchan 2022 plan further: the hypermarket chain needs to reinvent itself as customers buy more online and visit hypermarkets less frequently. The retailer will focus more on online grocery pick-up points and turn its hypermarkets around: there will be more space for food service activities and excess sales area will be leased to external non-food retailers.