Alibaba Group has agreed to sell its entire stake in Sun Art Retail Group, China’s largest hypermarket operator, for HK$13.1 billion (US$1.7 billion). The buyer is Chinese private-equity firm DCP Capital. The sale marks a shift in Alibaba’s strategy as the company moves away from brick-and-mortar retail to focus more on its core e-commerce business.
The Details of the Sale
The agreement was finalized on December 31, 2024, with Alibaba selling its interest in Sun Art at HK$1.75 per share. The company announced the transaction in a filing to the Hong Kong Stock Exchange on January 1, 2025.
Despite the sale price, Alibaba expects to book a 13-billion yuan (US$1.8 billion) loss upon completion of the deal. This suggests that the company is prioritizing strategic realignment over short-term financial gains.
Alibaba’s Shift in Strategy
Alibaba acquired a controlling stake in Sun Art in 2017 as part of its push into physical retail. The company had envisioned integrating online and offline shopping experiences, a model known as “New Retail.” However, after years of expansion in physical stores, Alibaba has been scaling back its investments in traditional retail businesses.
This latest move follows other divestments by Alibaba, including the sale of some of its logistics and cloud computing assets. The company appears to be refocusing on its core e-commerce operations amid changing market conditions and increasing competition from rivals like JD.com and Pinduoduo.
The Future of Sun Art and DCP Capital’s Role
DCP Capital, the new owner of Sun Art, is a private-equity firm with a history of investing in consumer and retail businesses in China. The firm is expected to manage Sun Art independently, though it remains unclear whether any major operational changes will follow.
Sun Art operates some of China’s largest hypermarkets, including Auchan and RT-Mart. It has faced challenges in recent years due to shifts in consumer shopping behavior, with more Chinese consumers preferring online shopping over traditional hypermarkets.
What This Means for Alibaba
By selling its stake in Sun Art, Alibaba is reinforcing its commitment to e-commerce. The company is expected to reinvest in its online retail platforms, logistics, and digital services to strengthen its position in China’s highly competitive e-commerce market.
Alibaba’s decision reflects broader trends in the retail industry, where traditional hypermarkets are struggling to keep pace with the rapid growth of online shopping. Moving forward, Alibaba will likely focus on innovation in digital commerce, AI-driven retail, and cross-border e-commerce to maintain its leadership.