A Setting Suning
Accusations fly and theories abound concerning Suning’s mountain of debt, and declining prospects of paying it back. Suddenly a majority stake in Inter-Milan isn’t so much a Chinese brand statement as it is a vulgar, and even worse – unprofitable, display of wealth.
No one would expect Ronaldo to lace up his cleats once again and deliver consistent goals for IM. So why the persistent expectation that a 30-year-old company based on big box retailing can keep competing successfully? Terms such as “company life cycle” and “competitive advantage” apply to Chinese companies as well, and all the diversifying in the world won’t compensate for a core business whose time has come and gone.
“Although Suning has had some success online, it still has over 1600 stores across China, offering SKUs whose variety and price can be beat on ecommerce platforms such as JD.com,” says Jimmie Jeremejev. Once a distant second to the retail giant, JD is now valued 12 times higher, with almost triple the revenue in 2020.
“The takeaway is that Chinese shopping trends closely mirror the West’s. Companies selling B2C in China should be focused online. And the life cycle of big companies will continue to get shorter.”