China’s Alibaba to sell department store arm at $1.3 billion loss

China’s Alibaba has announced on Tuesday, its decision to sell the department store chain Intime, incurring a $1.3 billion loss.

The company is an online platform that connects wholesalers in China to individuals and business worldwide looking to trade or resell.

According to reports, the decision aims to streamline operations amid escalating competition in China’s e-commerce sector.

In a statement to the Hong Kong Stock Exchange, Alibaba confirmed that Intime would be sold to a consortium led by Youngor Group and Intime’s management.

Reports said that the company anticipates recording losses of about 9.3 billion yuan ($1.3 billion) due to the sale.

As gathered by the Diaspora Digital Media (DDM), the company in its latest quarter, reported a modest five percent year-on-year revenue growth, which did not meet expectations

Earlier on Monday, the official data released showed that China’s retail sales growth slowed to three percent year-on-year in November, falling short of forecasts as demand remains weak in the second-largest economy.

About China’s Alibaba

Alibaba Group Holding Limited, known as Alibaba, is a Chinese tech company that focuses on e-commerce and retail.

It was founded on June 28, 1999, in Hangzhou, Zhejiang.

The company offers consumer-to-consumer, business-to-consumer, and business-to-business sales through various marketplaces, along with digital media, logistics, and cloud computing services.

It possesses a wide-ranging portfolio of global businesses.

On September 19, 2014, Alibaba raised $25 billion during its IPO on the New York Stock Exchange, marking the largest IPO in history at that time.

The company ranks among the top ten most valuable businesses globally and stood as the 31st-largest public company on the Forbes Global 2000 list in 2020.

By January 2018, Alibaba had surpassed a $500 billion valuation, becoming the second Asian company to achieve this milestone.

As of 2022, it held the ninth-highest global brand valuation.

Alibaba ranks among the largest internet retailers worldwide.

In 2020, it also emerged as the fifth-largest company specializing in artificial intelligence.

History of China’s Alibaba

The name “Alibaba” derives from a character in One Thousand and One Nights, chosen for its worldwide recognition.

Jack Ma, one of the founders, discovered its appeal while talking to various people in San Francisco.

Early Years of China’s Alibaba

Jack Ma founded Alibaba.com on June 28, 1999, with 17 friends in his Hangzhou apartment.

In October 1999, the company secured a $25 million investment from Investor AB, Goldman Sachs, and Softbank.

Alibaba aimed to enhance China’s e-commerce landscape, particularly for small and medium-sized enterprises (SMEs), and became profitable in 2002.

To improve global e-commerce, Alibaba launched Taobao Marketplace, Alipay, Alimama.com, and Lynx starting in 2003.

When eBay entered China in 2003, Ma rejected its buyout offer for Taobao.

By leveraging technology and building trust, Alibaba’s subsidiaries surpassed eBay in the Chinese market, ultimately driving eBay out of China.

Expansion

In 2005, Yahoo! acquired a 40% stake in Alibaba for $1 billion.

The investment later generated $10 billion from Alibaba’s IPO.

In 2012, Chinese investors bought out Yahoo!’s stake.

In 2013, Alibaba planned to open retail outlets with Wanda Group and purchased a 25% stake in Intime Retail in 2014.

In 2014, Alibaba invested in Lyft and acquired a 50% stake in Guangzhou Evergrande F.C.

The company’s IPO on September 18, 2014, raised $21.8 billion, marking the largest IPO in U.S. history.

Following the IPO, Alibaba faced a class action lawsuit but settled for $75 million in 2018.

Alibaba invested approximately $320 million in Thailand’s Eastern Economic Corridor in 2018.

In January 2017, it announced an $800 million sponsorship deal with the International Olympic Committee lasting until 2028.

Jack Ma announced his resignation as chairman in September 2018 to focus on philanthropy.

Functions

Alibaba functions as a major venture capital firm and comes second in financial services, surpassed only by Visa, largely due to its fintech arm, Ant Group.

The company operates the largest B2B (Alibaba.com), C2C (Taobao), and B2C (Tmall) platforms.

Its foray into the media sector has proven lucrative, with rapid revenue growth.

Alibaba set a record on China’s Singles’ Day in 2018, the largest shopping event globally.

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