Suning Retail Cloud, a smart retail subsidiary of Chinese retailer Suning.com, is raising up to 480 million yuan ($67.7 million) in debt financing to fund its business pivot as the parent group struggles to turn a profit.
Suning Retail Cloud, a platform providing Suning.com stores with supply-chain, logistics, financial, and employee management solutions, is raising the debt financing from China CITIC Financial Asset Management, one of the four major state-owned financial asset management companies in China, its parent Suning.com disclosed in a stock exchange filing on Thursday.
The development follows a tough year for the parent group, which posted a 12.3% revenue drop to about 62.6 billion yuan ($8.7 billion) in 2023 from the previous year. While its annual revenue declined for the fourth consecutive year, the group managed to narrow its net loss by 74.8% in 2023, but the number still stood at a whopping 4.1 billion yuan ($577.2 million).
Its combined net loss in the four years from 2020-2023 crossed 67.8 billion yuan (over $9.5 billion) in the backdrop of weak consumer sentiment due to a pandemic-ridden domestic economy and China’s protracted property market crisis.
The leadership of Suning.com has been under pressure to turn the loss-making situation, with plans including a refocus on its core retail business centred around the sales of computer, communication, and consumer electronics, or the so-called 3C products.
Such plans also include shutting down most of the hypermarkets and convenience stores under Carrefour China, which Sunning.com acquired in 2019 from French retailer Carrefour Group in a deal that valued the Chinese branch at 1.4 billion euros ($1.5 billion).
Suning Retail Cloud was officially launched in July 2017 to help micro and small business merchants, especially in lower-tier cities and county-level markets in China, set up Suning-branded stores under the franchise model. It services a total of 10,756 franchise stores nationwide by the end of the first quarter this year.
This debt financing will allow the firm to optimise its supply chain, upgrade smart retail solutions, and speed up its development across lower-tier cities. It will also fund Suning Retail Cloud’s attempt to develop e-commerce capabilities to directly service consumers for “high-quality growth,” said Suning.com in the filing.
The new financing comes over three years after Suning Retail Cloud closed its Series A round from CPE China Fund and ADV Partners in April 2021. The firm did not reveal the financial details of its previous round, but the investment size was said to be approximately 1 billion yuan ($141 million), the China Securities Journal reported, citing sources.
