Chinese Tech Giant Courts Potential Buyers for Physical Outlets

Alibaba Group Holding Ltd. (NYSE: BABA) may be planning to sell some of its brick-and-mortar businesses, including Intime, RT-Mart and Freshippo. Intime is a shopping mall operator while RT-Mart is a retailer operating under the company. On the other hand, Freshippo operates as a grocery business.

This move comes as the Chinese tech giant places more focus on its e-commerce business model and may, in part, be fueled by the huge amounts of effort offline businesses need in order to run efficiently.

It should be noted that the company has yet to give its official statement on the matter.

In the recent past, Alibaba Group has engaged in discussions with financial and strategic investors in an effort to measure their interest in their nonprofitable, noncore assets. In March 2023, the company announced the division of its business into six units. It has already filed a listing application for its logistics arm Cainiao. Despite this, it is still uncertain whether the company will go through with the sales.

Experts believe this move is part of the tech giant’s efforts to restructure and may be influenced by growing scrutiny of IPOs in China. It has become hard for startups to raise financing, with the current performance of the capital markets.

CEO Eddie Wu stated that the company would soon review its businesses and categorize them as either core or noncore entities. Wu was appointed to the role of CEO in September 2023 after his predecessor Daniel Zhang stepped down. The change in the company’s management has renewed focus on cloud computing and overseas expansion, domestic e-Commerce and investments into artificial intelligence (“AI”).

Toward the end of last year when the company announced its quarterly earnings, it also revealed that it wouldn’t spinoff its cloud intelligence business. This announcement came after the United States government imposed restrictions on cloud and AI tech exports to China.

Freshippo, also referred to as Hema, provides dine-in-services and half-hour home deliveries, in addition to groceries. The business, which was launched in 2016, owns more than 300 stores in 28 cities in China.

In 2022, the company announced that it aimed to raise funds at a $6 billion evaluation. It is yet to announce completion of the fundraising.

With regard to RT-Mart, Alibaba Group injected $3.6 billion into Sun Art Retail Group in 2020. This afforded it a controlling stake in RT-Mart. However, this investment into the brick-and-mortar retail sector in China is yet to bring in any profits.

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