---
title: "State Capital Steps In Again, Suning Temporarily Out of Trouble"
description: "After a series of twists and turns, Suning.com (002024.SZ) finally received financial relief. On the evening of July 5, Suning.com announced that Jiangsu Province and Nanjing City state capital led the establishment of the second phase of Jiangsu New Retail Innovation Fund (Limited Partnership), with a total scale of 8.83 billion yuan, inviting Huatai Securities, Alibaba, Xiaomi, Haier, Midea, and TCL industrial investors to participate. The fund will acquire 16.96% of Suning.com's shares to support the company in addressing liquidity issues and stabilizing corporate financing."
author: "联商网编辑部"
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published: "2021-07-06"
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# State Capital Steps In Again, Suning Temporarily Out of Trouble

> After a series of twists and turns, Suning.com (002024.SZ) finally received financial relief. On the evening of July 5, Suning.com announced that Jiangsu Province and Nanjing City state capital led the establishment of the second phase of Jiangsu New Retail Innovation Fund (Limited Partnership), with a total scale of 8.83 billion yuan, inviting Huatai Securities, Alibaba, Xiaomi, Haier, Midea, and TCL industrial investors to participate. The fund will acquire 16.96% of Suning.com's shares to support the company in addressing liquidity issues and stabilizing corporate financing.

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After a series of twists and turns, Suning.com (002024.SZ) finally received financial relief.
On the evening of July 5, Suning.com announced that **Jiangsu Province and Nanjing City state capital led the establishment of the second phase of Jiangsu New Retail Innovation Fund (Limited Partnership), with a total scale of 8.83 billion yuan, inviting Huatai Securities, Alibaba, Xiaomi, Haier, Midea, and TCL industrial investors to participate.**
The announcement stated that **the fund will acquire 16.96% of Suning.com's shares** to support Suning.com in addressing liquidity issues, stabilizing the corporate financing environment, and promoting stable operations and sustainable development. Jiangsu and Nanjing authorities will coordinate with financial institutions in the province to restore credit to Suning.com at a reasonable level. After the completion of the share transfer agreement, Suning.com will no longer have a controlling shareholder or actual controller.
The announcement also stated that **Alibaba's shareholding in Suning.com remains unchanged, and the previously rumored "Alibaba will acquire most of Suning's shares" is not true.**
Suning.com stated that after careful consideration and mutual agreement, it decided to terminate the previously planned issuance of shares to purchase assets related to the transaction. The company's stock will resume trading on Tuesday, July 6, 2021. The company promised not to plan any major asset restructuring within one month from the date of this announcement.
**Introduction of Shenzhen State Capital Unsuccessful**********
On February 25, Suning.com announced the introduction of Shenzhen state capital, but the transaction ultimately failed.
On the evening of July 5, Shenzhen International Holdings Limited (hereinafter referred to as "Shenzhen International") announced that it failed to reach a final agreement with Suning.com's shareholders on commercial cooperation conditions. After comprehensive consideration of various factors and prudent analysis, it decided to terminate the potential acquisition.
However, Shenzhen International stated that it will continue to explore cooperation opportunities with Suning.com in the logistics business.
Due to planning for control changes and share transfers, Suning.com's stock has been suspended multiple times.
In the most recent announcement, Suning.com stated that to further strengthen its offline core capabilities, the company will enhance its acquisition of high-quality store assets. The company planned to issue shares to purchase assets, specifically the 100% equity of the project company held by Shenzhen Capital Suning Yunxin Private Investment Fund, with the specific scope of project companies still under discussion. Suning.com would suspend trading from June 23, 2021.
Suning.com also announced that its actual controller and controlling shareholder Zhang Jindong and shareholder Suning Appliance Group were planning major matters involving the transfer of company shares.
As of the announcement date (June 22), the aforementioned share transfer work was in progress. If the share transfer is completed, the company will be in a state of no controlling shareholder and no actual controller. This transaction will help further optimize the company's equity structure and steadily advance its long-term strategy. The company's shareholders will complete the signing of the share transfer agreement as soon as possible.
Previously, there were rumors that Suning Real Estate would go bankrupt and Alibaba would take over part of Suning.com's shares. In response, Suning stated that it had reported the matter to the police and would seriously pursue the legal responsibility of the rumor mongers, asking the public to rely on official announcements.
Earlier, after the market close on June 16, Suning.com announced that it had received notice from its actual controller and controlling shareholder Mr. Zhang Jindong and shareholder Suning Appliance Group Co., Ltd. that they were planning major matters involving the transfer of company shares. The company's stock was suspended from trading from the opening on June 16, with an expected suspension period not exceeding 5 trading days. However, on June 22, Suning.com applied for another suspension.
Just one day before the suspension announcement on June 16, Suning.com announced that 5.8% of shareholder Zhang Jindong's shares had been frozen by the Beijing Second Intermediate People's Court. The freezing date was June 11, 2021, with an expiration date of June 10, 2024.
In addition, Suning Appliance triggered a breach due to some stock pledge repurchase transactions, leading to a passive reduction of 10 million shares on June 11. Due to triggering breach clauses, Suning Appliance has passively reduced 29.5 million shares, and may reduce no more than 383.5 million shares in the next six months.
Affected by the above news, Suning.com's stock price hit the limit down on June 15, closing at 5.59 yuan, an 8-year low.
**Seeking "Reinforcements"******
Shortly after the debt crisis news broke in December last year, shareholders of Suning Holdings Group Co., Ltd., Zhang Jindong, Zhang Kangyang, and Nanjing Runxian Enterprise Management Center (Limited Partnership) pledged their company shares to Taobao (China) Software Co., Ltd. The share pledge registration date was December 4, 2020, with a total of 100,000 shares pledged.
At that time, regarding the share pledge, Suning.com responded that the pledge was a normal commercial cooperation and had no substantial impact on Suning.com's strategic development and normal operations.
On February 25, Suning.com announced that it planned to plan a change in control and suspended trading. Then on February 28, Suning.com announced the resumption of trading, announcing the introduction of state-owned strategic investment, with Shenzhen state capital officially becoming a new shareholder of Suning.com.
It was reported that Shenzhen International planned to acquire a total of 23% of Suning.com's shares for 14.817 billion yuan through its subsidiaries Shenzhen International and Kunpeng Capital.
After the transaction, Zhang Jindong and his concerted action parties Suning Holdings Group and Suning Appliance Group would hold 21.83%; Taobao (China) Software Co., Ltd. would hold 19.99%; Kunpeng Capital would hold 15%, and Shenzhen International would hold 8%, with a total of 23%, becoming the largest shareholder. Suning.com stated that after the share transfer, the company would be in a state of no controlling shareholder and no actual controller.
The "Share Transfer Framework Agreement" signed between Suning.com and Shenzhen state capital stated that all parties would actively promote the further signing of relevant agreements within 2 months after the agreement took effect. If the parties did not further sign relevant agreements within 6 months after the agreement took effect, the transaction would automatically terminate.
However, after announcing the introduction of Shenzhen state-owned strategic investment, no new announcements were made by both parties, and the transaction had not been formally completed. In May, there were market rumors that Shenzhen state capital had fully suspended related due diligence work. Suning.com responded that the information mentioned in the rumors was false and untrue, and Shenzhen state capital was conducting normal project due diligence.
On June 2, Suning.com issued another announcement stating that shareholder Suning Appliance Group signed a "Share Transfer Agreement" with Jiangsu New Retail Innovation Fund (Limited Partnership). Suning Appliance Group planned to transfer 520 million shares (5.59% of the company's total share capital) to the New Retail Fund, with a total transfer price of 3.182 billion yuan. However, according to the agreement, Suning must repurchase the transferred shares, which is essentially a loan for Suning.com that needs to be repaid with principal and interest upon maturity.
Suning.com's 2020 financial report showed that revenue for the period was 252.296 billion yuan, a year-on-year decrease of 6.29%; net profit was -4.275 billion yuan, a year-on-year decrease of 143.43%; net profit after deducting non-recurring gains and losses was a loss of 6.8 billion yuan, a year-on-year decrease of 19.19%. It is reported that this is the seventh consecutive year that Suning.com has recorded a net loss after deducting non-recurring items.
The subsequent 2021 first-quarter report showed that although revenue decreased by 6.63% year-on-year, net profit reached 456 million yuan, achieving a turnaround from losses, compared to a net loss of 551 million yuan in the same period last year.
However, this turnaround was mainly due to the disposal of subsidiary assets. The financial report showed that Suning.com generated investment income of 1.517 billion yuan from the disposal of subsidiaries. After deducting non-recurring items, Suning's actual loss in the first quarter was 938 million yuan, with the loss expanding by more than 80% year-on-year.
Suning.com's 2021 first-half performance forecast showed an expected loss of 2.5 billion to 3.2 billion yuan, compared to a loss of 170 million yuan in the same period last year.
**Future Focus on "Main Track"******
The retail industry has always had the saying, "A history of retail, half of it is Suning." Starting from Suning Jiaodian, to Suning Appliance, Suning Yunshang, and then Suning.com, from the siege of eight major shopping malls in Nanjing, to the battle between Suning and Gome, and then the war between Suning and JD.com, in 30 years of commercial competition, focusing on retail, finance, and logistics tracks, Suning gradually built eight major industrial sectors including Suning.com, logistics, finance, technology, real estate, cultural creativity, sports, and investment.
However, due to the failure of diversified business layout, rising asset-liability ratio, and increased financial leverage, Suning has always been under tremendous financial pressure.
Since 2014, Suning.com has been loss-making for seven consecutive years. From 2014 to 2019, Suning.com's net profit after deducting non-recurring gains and losses was -1.252 billion yuan, -1.465 billion yuan, -1.108 billion yuan, -88 million yuan, -359 million yuan, and -5.711 billion yuan, respectively. Over the past seven years, Suning.com's cumulative losses have exceeded 16 billion yuan.
While incurring losses, Suning.com successively adopted measures such as transferring stores, transferring acquired assets, selling equity, and pledging equity to alleviate difficulties. In addition to the above methods, in 2020, Suning.com conducted asset impairment tests on long-term assets formed by various businesses including department stores, maternal and child products, and supermarkets, with asset impairment provisions and investment losses of approximately 2 billion yuan.
Furthermore, Suning.com also planned to quickly adjust the low-value, high-loss external business order volume undertaken by Tiantian Express.
Previously, Suning had announced the transfer of the Jiangsu Football Club. Regarding Inter Milan, Suning stated that negotiations with potential partners were ongoing. However, in early June, Suning.com announced an agreement with Oaktree to complete a 275 million euro financing for Inter Milan, and there are still variables as to when Inter Milan will be sold.
In Suning's fourth employee stock ownership plan, Suning.com announced its performance targets for the next three years: from 2021 to 2023, the company's revenue growth rates should not be less than 20%, 20.83%, and 17.24%, respectively, with net profit after deducting non-recurring items of losses of 500 million to 1 billion yuan, profits of 1 billion to 1.5 billion yuan, and profits of no less than 3 billion yuan.
According to the plan, Suning.com will achieve a turnaround in 2022.
On February 19, Zhang Jindong proposed at the Spring Festival group worship: "For those not in the main retail track, we must actively do subtraction, shrink the battle line, close what should be closed, and cut what should be cut."
**Suning.com stated that the main tone for development in 2021 is focus and efficiency, achieving a transformation from a business model to a profit model.**
To this end, the focus will be on four profit points: home appliances, self-owned products, adjustment of low-efficiency businesses, and control of various expenses, while strengthening four scale growth sources: Suning.com main site, Retail Cloud, B2B platform, and Maoning. Suning.com Retail Cloud has already achieved profitability and also secured financing. On April 12, Suning.com Retail Cloud announced the completion of Series A financing, with CPE and Andafu Fund participating in the investment.
Suning.com Retail Cloud was established in 2017 as an open platform for Suning.com's smart retail capabilities to be exported externally, quickly seizing the lower-tier market with the innovative model of "supply chain + stores + social e-commerce." As of the end of 2020, Suning.com Retail Cloud had opened a cumulative 8,000 stores with annual sales exceeding 20 billion yuan, becoming one of Suning.com's new growth points.
Zhang Jindong previously stated that when a company grows big, it belongs to society and the country. From one store to over 10,000 stores, from a few people to 300,000 employees, Suning has written a glorious chapter in China's retail history over 30 years of development.
Lao Dao, a member of the Lianshang Senior Advisory Group, believes that from the perspective of China's retail industry development, **Suning has always been the most outstanding representative of China's only transformation from a traditional, single offline hypermarket to an online full-category e-commerce platform.** To date, no traditional retail enterprise can match Suning's achievements in the online transformation process. Zhang Jindong has the wisdom and boldness of a strong person, which is undeniable.
"After the transformation, Suning's scope was too large, and the strategy was not focused, leading to financial tightness, but it can still be overcome. Given time, if Suning can achieve good integration, truly interact online and offline, empower each other between categories, and continuously innovate, focusing on its unique advantageous resources, it is not impossible for Suning.com to achieve greater rise," he said.
Best wishes to Suning.
Source: New Retail (ID: ixinlingshou)
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