Europe’s largest retailer Carrefour joins Amazon to exit the China market

Darnell Taylor
June 27, 2019

This year, the FMCG subsidiary of Suning.com has shown impressive advancement in the creation of shopping scenarios and establishment of supply chains.

The agreement with Suning values Carrefour's China operation, including debt, at 1.4 billion euros ($1.6 billion), with options to sell the remaining 20% stake.

The yielding of control comes after a long search for a partner for its struggling Chinese operations.

Carrefour will keep two out of seven seats on the board of Carrefour China.

Carrefour, Europe's largest retailer, has spent years trying to fix its business in China where its 2018 sales fell 5.9 percent to €4.1 billion. The transaction values 100 percent of Carrefour China at an equity value of 6 billion yuan.

"The competition in China is so fierce that you really need to double down in order to win". Germany's Metro is said to be offloading a majority stake in its Chinese business. Its earnings before interest, tax, depreciation and amortization, or Ebitda, stood at €66 million or 516m yuan.

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Carrefour, which operates 210 hypermarkets and 24 convenience stores in China, has been present in the country since 1995.

Suning.com has an advantage of smart retail that will help in the promotion of digitalizing Carrefour China's existing stores, leading to an innovative supermarket experience, sources said.

Following Suning's acquisition, Yonghui announced the termination of the deal on Monday.

Alibaba holds a 20% stake in Suning and the two companies are closely allied.

Walmart Inc. sold its online shopping platform to JD.com in 2016 in return for a stake in JD.com as the US retailer focused on its bricks-and-mortar stores. However, like many other foreign companies, Carrefour has to contend with the rapid transition to online shopping in China.

The Nanjing-headquartered retailer, which started off by selling home appliances, has been strengthening its brick-and-mortar neighborhood store called Suning Xiaodian, or "small stores", targeting household consumption of daily goods and groceries mostly in lower-tier cities.

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