China's e-commerce giant Alibaba will invest 28.3 billion yuan ($4.6 billion) in exchange for a 19.99-percent stake in leading consumer electronics retailer Suning, the two companies said in a joint statement on Monday.
Alibaba's investment is currently its biggest initiative toward combining digital and offline shopping. At the same time, Suning will invest 14 billion yuan to acquire 1.1 percent of Alibaba, the statement said, which leads to the deal being valued at nearly $7.0 billion.
The deal will make Alibaba the second largest investor in Suning, according to the statement.
Suning has become one of the biggest Chinese retailers in consumer electronics, while the Tmall.com website by Alibaba holds immense online traffic, commanding more than half of business-to-consumer operations in the Chinese market. Alibaba's Taobao channel holds over 90 percent of China's consumer-to-consumer market.
"Over the past two decades, e-commerce has become an inextricable part of the lives of Chinese consumers, and this new alliance brings forth a new commerce model that fully integrates online and offline," Alibaba's founder and executive chairman Jack Ma said.
Zhang Jindong, Suning's chairman, said that the deal aims to "help transform China's manufacturing industry and broaden the global horizons of Chinese brands."
It is the most recent among the series of Alibaba's acquisitions, as Ma aims to diversify his massive New York-listed company, which is now being challenged by local competitors from Internet leaders Baidu and Tencent, and still continues to be unpopular outside China.
Internet Strategy
"Internet Plus," an Internet strategy by China's leaders, has been introduced as an initiative to merge online and offline sectors and to promote more tech-driven, high-value financial benefits, as the globe's second largest economy struggles with stalled growth.
Alibaba sees the partnership as a major step to rise against its major rival, JD.com, which has been steadily receiving strong sales of gadgets and electronics.
However, JD.com easily played down Alibaba's new alliance.
"Over 12 years we've built a reputation for amazing delivery speed and attention to customer experience. That's why we've been able to build a market leading position, and it's very tough to duplicate," JD.com stated.