PARIS/SINGAPORE/BEIJING - Shares in France’s Carrefour rose on Monday after it became the latest Western retailer to retreat from the Chinese market as fierce competition from domestic rivals and a growing online market puts pressure on foreign firms.
Carrefour, which has been in China since 1995, agreed to sell 80% of its Chinese operations to electronics retailer Suning.com for 620 million euros . A source told Reuters that Suning had been interested in both Metro and Carrefour China businesses, compared the two, and found Carrefour China cheaper.Carrefour, led by Chief Executive Alexandre Bompard since 2017, has spent years trying to fix its business in China where its 2018 sales fell 5.9% and its operating loss was 32 million euros.The agreement with Suning values Carrefour’s China operation, including debt, at 1.4 billion euros , with options to sell the remaining 20% stake.
“This is a good move by Carrefour allowing them to focus on their core French business, whilst keeping a stake in the Chinese business, keeping some visibility on what is happening in the fastest moving grocery market,” Bernstein added.Carrefour which faces pressure in France from traditional rivals like Leclerc and from Amazon, is in the midst of a five-year restructuring plan to boost group sales and profits.
Suning, which is backed by Alibaba, said in a statement that the acquisition will allow it to strengthen its brand as well as boost its marketing capabilities, food quality control and supply chain management in the sector. Carrefour announced a partnership last year with Tencent, which led to the opening of a store in Shanghai.
Films? As in Monaco?
France fought a fierce battle. Thank you, France!
Retreating from China will be considered one of the dumbest moves a company could make in 2019.
Apparently Wall Street loves stocks that quit from unfair, un-reciprocating business environments.
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