Chinese retailer Suning.com has raised $68 million for its smart retail division

Suning Retail Cloud, the smart subsidiary of Chinese retailer Suning.com, is raising up to 480 million yuan ($67.7 million) in debt financing to finance its business turnover as the parent group struggles to turn a profit.

Suning Retail Cloud, a platform that provides Suning.com stores with supply chain, logistics, finance and workforce management solutions, is raising debt financing from China CITIC Financial Asset Management, one of the four major state-owned financial asset management companies in China, its parent company Suning. com disclosed in the stock exchange report Thursday.

The development comes after a difficult year for the parent group, which saw revenue decline 12.3% to about 62.6 billion yuan ($8.7 billion) in 2023 compared to the previous year. Although the group’s annual revenue declined for the fourth consecutive year, the group managed to reduce its net loss by 74.8% in 2023, but the figure still remained at an impressive 4.1 billion yuan ($577.2 million).

The company’s total net loss over the four-year period 2020-2023 exceeded 67.8 billion yuan (over $9.5 billion) amid weak consumer sentiment caused by the pandemic domestic economy and the prolonged real estate crisis in China.

Suning.com’s management was under pressure to turn around a loss-making situation, and plans included refocusing on its core retail business of selling computers, communications devices and consumer electronics, the so-called 3C products.

Such plans also include the closure of most hypermarkets and convenience stores under Carrefour China, which is backed by Sunning.com acquired in 2019 from French retailer Carrefour Group in a deal that valued the Chinese unit at 1.4 billion euros ($1.5 billion).

Suning Retail Cloud was officially launched in July 2017 to help micro and small enterprises, especially in lower-tier cities and county-level markets in China, set up Suning-branded stores under a franchise model. At the end of the first quarter of this year. operates a total of 10,756 franchise stores throughout the country.

This debt financing will enable the company to optimize its supply chain, enhance smart retail solutions and accelerate growth in downstream cities. It will also fund Suning Retail Cloud’s efforts to develop e-commerce capabilities to serve consumers directly to ensure “high-quality growth,” Suning.com said in the application.

The new financing will come within three years of Suning Retail Cloud finished the Serie A round from CPE China Fund and ADV Partners in April 2021. The company did not disclose the financial details of the previous round, but the investment size was estimated at about 1 billion yuan ($141 million), China Securities Journal reported, citing sources.