Click to read the original article for details Source: Future Consumption APP (ID: lslb168) Author: Zhao Xiaomi The relationship between Suning and Alibaba is harmonious on the surface, but beneath lies strategic maneuvering. On July 29, Suning.com issued an announcement officially revealing the new board of directors list. Huang Mingduan, former CEO of RT-Mart, nominated by Alibaba, will serve as the new chairman; the company's president will be Ren Jun, nominated by Zhang Jindong and former president of Suning Cloud Commerce. After adding four new non-independent directors—Huang Mingduan, Xian Handi, Cao Qun, and Zhang Kangyang—the board of Suning.com now consists of six non-independent directors: Ren Jun and Zhang Kangyang (nominated by Zhang Jindong); Huang Mingduan and Liu Peng (non-independent director candidate, nominated by Taobao China); and Xian Handi and Cao Qun (nominated by Jiangsu New Retail Innovation Fund Phase II), along with three independent directors. The news that Huang Mingduan would succeed as Suning's chairman was known in the industry nearly a month ago. However, what the industry didn't know was that the president position would not be taken by Liu Peng, general manager of Tmall Global, as internal sources had hinted, but by Ren Jun, Zhang Jindong's capable right-hand man. This time, Alibaba's condition for helping Suning resolve its debt issues was a "comprehensive takeover" of Suning. Besides nominating Huang Mingduan as chairman, Alibaba also dispatched personnel to intervene in key positions. As 36Kr-Future Consumption learned, Suning's PR department is now headed by a person sent by Alibaba; according to Jiemian News, Suning's internal CFO is the former financial director of Maoning (Suning's Tmall flagship store), and the CHO also comes from Alibaba's HR system. Various departments have been taken over by Alibaba, but the president position, second only to the chairman in importance, has been given to Ren Jun from the Zhang Jindong camp. This indicates that Zhang Jindong has not completely let go of Suning. The relationship between Alibaba and Suning is harmonious on the surface, but beneath lies strategic maneuvering. Undercurrents in Management Ren Jun is the youngest vice president in Suning's history and is widely recognized within the company as the most capable among the younger generation. The non-listed business "Yunwang Wandian" spun off from Suning is fully managed by Ren Jun. But before the official announcement of the senior management adjustment, the industry generally believed that Ren Jun was more likely to take an executive CEO position. On one hand, as Zhang Jindong's close aide, Ren Jun's appointment as chairman or president would be difficult to balance the interests of various shareholders; on the other hand, with the resignation of veteran Zhang Jindong loyalists like Sun Weimin and Meng Xiangsheng from the board, it was easy to assume that the Zhang Jindong camp would gradually hand over management to Alibaba. Now, not only has Ren Jun retained his director position and taken the president role, but Zhang Kangyang, Zhang Jindong's son, a post-90s with limited knowledge of Suning's main business, has also been successfully elected to the board. As a result, among the non-independent directors, the Zhang Jindong camp and the Alibaba camp each hold two positions, showing a balanced force. This means that Alibaba has not yet achieved complete control over Suning; instead, Zhang Jindong may continue to strongly intervene in Suning's business behind the two key figures he has protected. On July 12, in an internal letter to employees, Zhang Jindong explicitly stated: "In the days ahead, as Honorary Chairman of Suning.com, I will continue to fight alongside you." According to Tencent's Deep Web report, Alibaba was not informed in advance of the public letter and was "somewhat angered" by it. Alibaba's displeasure is understandable. Huang Mingduan's seniority and status in the retail industry are significant. If Zhang Jindong, as founder and honorary chairman, appears publicly with Huang after Huang takes office, it would not only be inappropriate but also carry a hint of internal strife. Furthermore, at the board meeting, the newly appointed Huang Mingduan clearly proposed Suning's three strategic paths: to be a good retail service provider, strengthen the supply chain, and improve operational quality. In his speech, the new president Ren Jun stated that Suning.com now needs to do two things: first, further consolidate and highlight three core competencies; second, rebuild the retail service provider in a more open manner. It's hard to imagine that the chairman and president of the same company would have differing definitions of the company's strategy on the same day at the company's new senior management restructuring meeting. It is evident that the harmony between Suning and Alibaba is not as high as imagined. Why Huang Mingduan? Over the past six months or so, due to Suning's debt crisis and corporate losses, both external public opinion and internal employees have had unprecedented doubts about the company's future development. Under such circumstances, the news that Huang Mingduan would take over Suning caused a stir in the industry when it was first disclosed. On one hand, Huang Mingduan is a star entrepreneur who has already achieved success and retired. At 66, semi-retired from RT-Mart, he had no need to accept the hot potato of Suning. On the other hand, the two companies had little prior interaction; the only direct connection was that Suning had been operating the home appliance shelves in RT-Mart stores for three years. But from Alibaba's perspective, inviting Huang Mingduan was a reasonable choice. First, RT-Mart is also controlled by Alibaba, so in terms of shareholder cooperation and industry authority, Huang Mingduan is a candidate acceptable to both Alibaba and Suning. Second, Suning's heaviest business asset is still its physical stores. At this time, within the Alibaba system, the only person with extensive experience in leading physical stores and currently idle is Huang Mingduan. Moreover, Suning currently lacks capabilities in FMCG categories. Related layouts include Carrefour, Suning Xiaodian, and the FMCG business in online Suning.com. But Carrefour's market share is relatively low, and it retains significant independence in operations; Suning Xiaodian is also suffering heavy losses. At this point, Huang Mingduan can leverage his over 20 years of management experience in household consumer goods to boost Suning's FMCG business capabilities by managing or integrating the above three entities. In summary, Huang Mingduan is the only candidate that Alibaba can deploy who simultaneously possesses personal charm, personal authority, and personal ability. For Suning, Huang Mingduan's tasks, besides adjusting several FMCG business formats, include two more: First, defend Suning's No.1 position in the home appliance category. Currently, according to the "2020 China Home Appliance Industry Annual Report," Suning still holds over 20% market share, ranking first in the industry. But JD.com is second with 17%, and the gap is narrowing. As the foundation of Suning's entire business, home appliances must not be lost. Second, maintain the rapid development of Suning Retail Cloud. Retail Cloud is the fastest-growing and most mature business in Suning's current operations. In simple terms, it shrinks Suning appliance stores and uses a franchise model to go down to townships, with nearly 10,000 stores already. This is Suning's best business in the past few years. Therefore, Suning needs to keep Retail Cloud sprinting forward as much as possible and achieve the store opening targets set earlier. Furthermore, considering Huang Mingduan's age and semi-retired status, he may play a transitional role in the chairman position. Huang Mingduan also has to shoulder the heavy responsibility of bridging the old Suning and the future new chairman. Why Did Alibaba Take Over Suning? For Alibaba, what is the significance of going to the trouble of connecting with state capital and taking over Suning? First, Suning's online website, the B2C platform Suning.com, is of little significance to Alibaba. On one hand, all services Suning.com can provide, Taobao and Tmall can also provide; on the other hand, Suning.com's monthly active users and GMV are not high. For Alibaba, considering the cost of retaining and transforming this APP, it might be better to simply abandon it. What Alibaba values most about Suning are: first, its physical stores; second, its home appliance supply chain. Alibaba's chairman and CEO Daniel Zhang has clearly stated that in the next 20 years, Alibaba will explore and create business infrastructure, of which supply chain and logistics are important components. The home appliance supply chain and physical stores are exactly where Suning's capabilities lie. Suning.com may become the most important participant in the home appliance category in Alibaba's future same-city retail business segment. Currently, Suning has over 2,600 self-operated stores, including 37 Suning.com Plazas, 131 Suning.com direct-operated stores, and 2,081 home appliance, 3C, and home lifestyle specialty stores. Plus over 7,000 Suning Cloud Stores scattered across the country, these Suning stores can directly serve as shipping points for Alibaba's future same-city retail home appliance segment, directly supplementing Alibaba's home appliance logistics capabilities. On the supply chain side, Alibaba can directly channel the relationships Suning has established with home appliance manufacturers and brands to Tmall's home appliance category. This includes deep cooperation between Suning and brands like Haier and Midea, covering pre-sales, after-sales, trade-in, and other services. Therefore, the two hard assets Suning currently possesses hold unique value in Alibaba's layout and are important reasons why Alibaba must rescue Suning. This board change, theoretically, can achieve a win-win situation for both Alibaba and Suning. However, the integration of personnel and business between the two sides, as well as the collision of internal decision-making between the Alibaba camp and the Zhang Jindong camp, will affect the final outcome. PS: From August 24-26, 2021, the 2021 (4th) China FMCG Conference hosted by New Distribution will be held in Shanghai. Focusing on industry trends + practical cases + growth connection as the core, 3,000 FMCG practitioners will gather for the event. 10 thematic forums cover new retail O2O, community group buying, short video live e-commerce, distributor transformation, rise of new consumer brands, new alcoholic beverage interpretation, distribution B2B supply chain, omnichannel marketing, B2B2C new technology applications, etc., with operators from various segments bringing the latest case studies. Some of the confirmed heavyweight guests so far include: **1. Tao Shiquan, founder of Jiangxiaobai; **2. Yao Xuhong, general manager of Meiyijia Holdings Co., Ltd.; **3. Lu Xiuqiong, global expert partner at Bain & Company and former vice president of marketing for Coca-Cola China; **4. Chen Xiaodong, senior vice president of Nestlé Greater China; **5. Zhang Fujun, president of Lee Kum Kee Sauce Group China; **6. Bi Chaojiao, general manager of China Resources Snow Breweries (China) Marketing Center; **7. Yang Hongbin, vice president of Junlebao Dairy Group; **8. Yang Shun, COO of Lipton Greater China; 9. Zhang Yipeng, general manager of Kuaishou E-commerce SKA Brand Operations Center; 10. Li De, general manager of e-commerce at Gold Hong Ye Paper Group... A grand gathering for FMCG practitioners, you must be there! Are you "watching" me?