The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
According to China’s national enterprise credit database, Suning Holding Group’s shareholders have pledged all of the company’s equity, worth 1 billion yuan, to Alibaba’s Taobao division in order to secure a loan.
Suning is one of China’s biggest retail chains, in addition to owning 37 department stores it acquired from Wanda Group last year and concept stores under its Jiwu brand. After taking a loan against its equity, Suning could be taken over by Taobao or be sold if the company fails to pay back the sum. A Suning representative has told local media outlets that the share pledge won’t change its e-commerce and retail strategy.
The news points to China’s uneven recovery post-Covid-19, as share pledging is typically a last resort for companies who are struggling to secure needed funds. It also highlights the market consolidation that could occur as a result of the crisis. The news comes just weeks after Alibaba announced a deal with Farfetch and Richemont, further cementing the former’s status as China’s leading e-tailer for luxury and fashion.
With consumers tightening their belts in China, the battle between global fast fashion brands and local high street giants has intensified.
Investors are bracing for a steep slowdown in luxury sales when luxury companies report their first quarter results, reflecting lacklustre Chinese demand.
The French beauty giant’s two latest deals are part of a wider M&A push by global players to capture a larger slice of the China market, targeting buzzy high-end brands that offer products with distinctive Chinese elements.
Post-Covid spend by US tourists in Europe has surged past 2019 levels. Chinese travellers, by contrast, have largely favoured domestic and regional destinations like Hong Kong, Singapore and Japan.