What’s new: China’s money-losing retail giant Suning.com Co. Ltd. is getting a financial lifeline of up to 480 million yuan ($66.2 million) from a state-owned asset manager to develop its retail cloud business.
The Jiangsu province branch of China Citic Financial Asset Management Co. Ltd. will provide a loan to Nanjing Suningjia E-Commerce Co. Ltd., Suning.com said in a stock exchange filing dated Thursday.
In exchange for the financing, three of Suning.com’s subsidiaries have put up assets as collateral.
The deal will help the Suning.com subsidiary “promote the development of its retail cloud business in lower-tier markets,” “optimize its existing supply chain,” “enhance the operating efficiency of its franchisees” and “accelerate its transformation” to a consumer-focused e-commerce operating system, the filing said.
Formerly China Huarong Asset Management Corp., Citic Financial Asset Management was created after Citic Group led a bailout of the bad-debt manager in 2021.
The background: The Nanjing, Jiangsu province-based retailer has been suffering an escalating debt crisis since 2020, following a borrowing-fueled acquisition spree. Despite losses in its core retail business, Suning.com continued to invest in real estate, telecommunications firms, sports streaming and a stake in the Italian soccer team Inter Milan.
In 2023, Suning.com reported a net loss attributable to shareholders of nearly 4.1 billion yuan, narrowing from about 16.2 billion yuan in 2022, even as revenue dropped 12.3%, according to company data. At the end of 2023, the company had a liability-to-asset ratio of 91.67%, compared with 89.22% a year earlier.
Founded in 2017, Suningjia mainly offers cloud services to merchants doing business on Suning.com’s platforms in lower-tier cities through a franchise model. As of March 31, it had 10,756 franchise outlets.
Contact reporter Ding Yi (yiding@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)
