Growth Dragons Weekly: Alibaba Sells Intime, Walmart-Meituan Partnership, WeChat’s Gifting Feature, and 6 IPOs to Watch
What happened in China this week:
Alibaba Dumps Intime Department Store for $1.3B Loss, SunArt Supermarket Next?
Walmart Partners with Meituan for Grocery Delivery, While WeChat Unveils New Gifting Feature
CATL Launches Battery Swapping and Subscription Service and Plans Hong Kong Listing
China Banks Raise Mortgage Rates: Why Now?
Hong Kong Stock Exchange Reforms IPO Rules to Attract More Listings
Five Upcoming IPOs: Innoscience, HealthyWay, Xunfei Healthcare, Minieye, and Dobot
#1 Alibaba Dumps Intime Department Store for $1.3B Loss, SunArt Supermarket Next?
Alibaba Group has announced the sale of its Chinese department store unit, Intime, to a consortium led by Youngor Fashion and Intime’s management team for 7.4 billion yuan (US$1.02 billion). The transaction reflects Alibaba’s ongoing restructuring efforts following its 2022 decision to split into six business units, signaling a renewed focus on its core e-commerce operations. However, the sale comes at a significant cost—a $1.3 billion loss—given Alibaba’s initial $2.6 billion acquisition of Intime in 2017. This acquisition was part of its ambitious “new retail” strategy aimed at integrating technology with traditional brick-and-mortar stores.
The pivot away from offline retail underscores Alibaba’s response to escalating competition from rivals like Pinduoduo and ByteDance, as well as subdued consumer demand in China. The company has also merged its domestic and international e-commerce divisions to address slowing growth in its home market while bolstering efforts to expand abroad. Other Chinese companies, including JD.com and Miniso, have similarly scaled back their offline retail investments amid changing market dynamics.
Reports indicate that Alibaba’s supermarket chain, Sun Art Retail, is also exploring a potential stake sale. These divestitures appear to align with Alibaba’s broader strategy to streamline operations and recycle capital. However, investors may remain cautious, potentially leading to stagnant or declining share prices as the company refocuses on e-commerce and sheds non-core assets.
On the AI front, Alibaba is reorganizing its AI development teams to sharpen their focus. The team behind its generative AI chatbot, Tongyi Qianwen, will be integrated into the Intelligent Information Platform, responsible for consumer-facing applications like UC Browser and Quark. Meanwhile, fundamental AI research will remain under Alibaba Cloud. This mirrors strategies adopted by other Chinese tech giants like ByteDance and Baidu, which have divided their AI teams to enhance specialization and align efforts with business priorities.
Alibaba’s investment in AI has yielded results, with the subscription cost for Tongyi Qianwen reduced by 97% over the past year, facilitating the development of over 78,000 derivative models. Beyond commercial applications, the company is leveraging its AI capabilities in academia, collaborating with more than 50 Chinese universities on research spanning biology, agriculture, and other fields. To regain investor confidence, Alibaba must reaffirm its leadership in China’s cloud market and reignite growth in this crucial segment, providing shareholders with a clearer path forward.
#2 Walmart Partners with Meituan for Grocery Delivery, While WeChat Unveils New Gifting Feature
Walmart, the U.S. retail giant, has partnered with Meituan, China’s leading on-demand delivery platform, to provide fast, door-to-door service across mainland China. This partnership follows Walmart’s decision to sell its stake in JD.com, marking the end of a long-standing collaboration. Meituan, widely recognized for its dominance in food delivery, also offers an array of services, including goods delivery, bike-sharing, and ticket booking. Through this new arrangement, Walmart announced via WeChat that all its stores in China are now listed on Meituan. Customers can access Walmart’s products through Meituan’s Shangou (“express shopping”) service, which guarantees delivery within 30 minutes.
This move underscores Walmart’s adaptive strategy in navigating China’s highly competitive retail market. Retailers in China are increasingly employing innovative methods to expand sales channels and maximize consumer reach. A prime example of this trend is WeChat’s new gift-giving feature, launched just in time for the holiday season.
WeChat’s gift-giving feature could significantly enhance its competitiveness as an e-commerce platform, leveraging the app’s deeply ingrained social connectivity. While Tencent does not operate a dedicated e-commerce platform like Taobao or Tmall, WeChat’s mini-programs allow sellers to set up storefronts and transact through WeChat Pay. Additionally, WeChat’s livestreaming functionality provides another channel for product promotion. The gift-giving feature, akin to its popular red-packet feature, is expected to drive e-commerce sales by integrating gifting into its ecosystem seamlessly.
Markets have responded positively to the announcement. Companies that sell on WeChat have seen their share prices surge, with Three Squirrels, a popular snack brand, jumping 12% in a single day following the news. This development highlights the potential for WeChat to solidify its position as a major player in China’s e-commerce landscape.