Shulou(Shulou.com)11/24 Report--

On October 21, Meituan Flash Shopping announced that it had formally reached a strategic cooperation with SUNING. More than 600 SUNING stores in the first batch of 175 cities have settled in Meituan.

At present, consumers can buy mobile phones, computers, household appliances and other products by searching for "SUNING" on Meituan or Meituan takeout App. Nearly 3000 SKU items can be delivered in 30 minutes at the earliest. It is reported that the two sides will continue to deepen cooperation and plan to enter more than 1000 stores in 2023.

One occupies a leading position in the field of local life services, and the other is a veteran retail service provider in the home appliance digital 3C market. The combination of huge online traffic and important retail channels has made the local express delivery system hot again, and many people have given great prospects to the "strategic cooperation" between the two sides.

The story of the local express delivery system sounds wonderful, but it is not a new concept, and it will never be the soul elixir of SUNING.

In recent years, SUNING has suffered continuous losses, heavy debts, and the deterioration of his financial situation, which has seriously limited his ability in product resources, sales and service, quality control and other aspects. In addition, founder Zhang Jindong and his son Zhang Kangyang have a steady stream of negative news, corporate executives have been widely criticized, and the performance of the secondary market is a mess.

Under such a current situation, even if the development prospect of the local express delivery system is bright, SUNING may not be able to grasp this life-saving straw. And even if there is this ability, there are Ali, JD.com, these players have already entered the game.

With the rolling wheels, the era belonging to SUNING has long been a thing of the past. When the situation is over and glory is restored, it is more of a kind of self-comfort.

Local express delivery is not soul for the retail market, offline bottlenecks have long been highlighted, online e-commerce industry development dividend is also marginal decline, players are in urgent need of a new direction to further open up incremental space.

In this context, the local express delivery system, which can make online and offline integration deeper, has gradually become a new tuyere for all major platforms. The so-called local express delivery system focuses on the word "fast". Orders are placed online and delivered in 30 minutes offline, and consumers can buy all kinds of goods more quickly, just like ordering takeout.

Such characteristics undoubtedly put forward higher requirements for the distribution capacity and product categories of the platform.

SUNING as a home appliance 3C chain brand in the "big brother", although has been in the second echelon, but still can not be ignored online traffic, as well as offline huge stores, product system. With flow, products and scale, SUNING seems to have many "advantages", but he just lacks the most critical distribution capability in the local express delivery system.

If you put the time back ten years, self-built distribution services, independent layout of the local express delivery system, it may not be difficult for SUNING, but the reality is not if.

In the current increasingly serious crisis of their own business, even if he has huge ambitions, SUNING does not have the energy and resources to put it into practice. If you want to grasp the straw of the local express delivery system, you must find a partner worthy of "entrusting". As a result, Meituan, who has a stronger distribution capacity and greater flow advantage, appeared.

Source: SUNING's cooperation seems to let SUNING see the hope of jumping out of the quagmire, but the new play of the local express delivery system is not as good as it sounds.

First of all, the core of the local express delivery system is "fast". Only when the products are delivered to consumers faster can more repurchases be produced and businesses can achieve profit growth, which is also the advantage of the local express delivery system over traditional e-commerce.

Even if you can borrow money, but due to the distribution of SUNING stores, the distribution time in some areas will still be extended. The best way to solve this problem is to lay out more stores, but this is obviously not realistic for SUNING, who is "burning high incense" without a large-scale shop closure.

Secondly, the local express delivery system is not a new concept. This so-called "tuyere" is already full of people, including not only Taobao, JD.com, pinduoduo, but also Yonghui supermarket, Da Runfa and many other traditional supermarkets.

For example, JD.com, SUNING's "old enemy", has long launched "hourly shopping" and "JD.com to Home". At present, it has been connected to 150000 physical retail stores, covering more than 17000 counties, districts and cities, and cooperating with more than 200. including supermarket fresh, mobile communications, digital home appliances, medicine and health, make-up and skin care and other categories, category coverage can be said to be very comprehensive.

Source: JD.com mobile phone hourly purchase as a latecomer, what does SUNING use to "fight" with these tough opponents?

In addition, SUNING's product categories are basically limited to 3C and household appliances, how strong is the real demand for the local express delivery system for these products? The answer can only be given after market practice.

From this point of view, the local express delivery system is more like a retreat that SUNING is not willing to be left behind, rather than a soul elixir that can bring it back to life.

From buying and selling to selling, it is undeniable that the local express delivery system does have certain prospects for development. SUNING may be able to achieve some growth after joining the bureau, but relying solely on the local express delivery system is not enough to reverse the market.

Standing at the moment, SUNING's blind buying-the strategic decision of diversification and expansion is the fundamental reason why he fell into the abyss. 4.25 billion acquired Tian Tian Express, 4 billion invested in China Unicom, 9.5 billion bought Wanda Business, 2.7 billion acquired Wanda Department Store, and 4.8 billion acquired Carrefour China. SUNING lost a lot of money on every big investment.

Of course, not all investments are failed. The share swap between 2015 and Ali enabled SUNING to make a profit on the company's books by selling Ali shares in 2017 and 2018.

Unfortunately, the soup stopped boiling, and the temporary "profit" could not stop the collapse of SUNING's building. From 2019 to 2021, SUNING's operating income increased by 9.91%,-6.29% and-44.94% respectively compared with the same period last year. In just three years, SUNING has changed from a "strategic expansion" to a rapid contraction.

On April 29 this year, SUNING disclosed his financial report for 2021. The net loss after deducting Fei was as high as 44.669 billion yuan, allowing SUNING to be crowned "A-share loss king" directly. This "blind" financial report is also directly reflected in the secondary market. In May this year, due to lack of sustainable management ability, SUNING officially "wore a hat" and became a "ST Tesco."

Source: as Futu Niuniu enters 2022, SUNING's financial situation has further deteriorated. After a series of actions such as continuous shop closure, divestiture of loss-making business and cost-saving, the inventory scale of its core electrical appliance 3C business reached an all-time low, and the sales scale declined sharply. Revenue in the first half of this year was 37.2 billion yuan, down 60.25% from the same period last year.

The change in the data is not very "image", being constantly debt collection, perhaps better reflect SUNING's difficult days.

Prior to this, SUNING's failure to fulfill the agreed terms in bank loans triggered default or cross-default clauses in some bank loans, resulting in banks and other financial institutions requiring companies to repay a total of 19.105 billion yuan in principal and interest in advance.

By July this year, SUNING suppliers jointly applied to the court for SUNING's bankruptcy liquidation. Bankruptcy rumors intensified, SUNING quickly refuted the rumors and clarified. But soon after, SUNING Electric Appliance and SUNING Real Estate were executed by the court for about 3 billion of the amount.

Historical information shows that in the eight years from 2013 to 2021, SUNING's total debt increased from 54.358 billion yuan to 139.709 billion yuan, and the asset-liability ratio rose from 65.46% to 81.83%. As of June this year, SUNING had borrowed as much as 32.03 billion yuan in short-term loans and had 13.16 billion yuan in non-current liabilities due within one year, which can be described as enormous financial pressure.

You always have to pay back the money you borrow, but with what? SUNING began to sell.

As early as 2013, SUNING has been selling assets to cash out, and SUNING also repaid his debts by selling his shares. However, the way to obtain funds through the sale of shares in the company is obviously not enough to meet the needs. As a result, SUNING even sold the employee dormitory.

The more he loses, the more he borrows. SUNING's development has long been caught in a vicious circle.

The tide is over, SUNING was founded in the 1990s, with the rapid economic growth, people's demand for electrical appliances has greatly increased, which gives SUNING a good opportunity for development.

After the biggest competitor Gome fell into the development crisis, SUNING soared into the sky and became the dominant enterprise in the offline retail market at that time. With the passage of time, SUNING's malpractice of turning around in the shipwreck appeared and missed the opportunity to catch the last bus in the e-commerce era.

Source: after the price war between SUNING and JD.com in 2015, SUNING began to expand blindly. Obviously, SUNING's luck has been exhausted. In 2017, SUNING invested 20 billion yuan in Evergrande's strategy through its subsidiaries, which directly led to the rupture of SUNING's capital chain and officially declared that the era belonging to SUNING has passed.

When SUNING came to such a field today, founder Zhang Jindong and his son Zhang Kangyang also plummeted.

In the book Zhang Jindong's belief in Management, Zhang Jindong mentioned such a sentence: "in the fourth decade, SUNING wants to change from hundreds of billions to trillions, I must have results."

But Zhang Jindong never imagined that just three years later, he, the founder who led SUNING to the peak, had changed from chairman to "honorary chairman." The dream of hundreds of billions of variables and trillions is also shattered.

In July 2021, Zhang Jindong submitted to the board of directors his resignation as chairman of the company, director and chairman of the board's strategy committee, and was also hired as honorary chairman. In addition, Sun Weimin, his right-hand man, also resigned as vice chairman and director, and Meng Xiangsheng offered to resign as a director.

Although Zhang Jindong ostensibly lost control over SUNING, he is still the largest shareholder, with a stake of 20.35%. Taobao China is the second largest shareholder, with a stake of 19.99%. Also in July 2021, Jiangsu State assets, together with Ali, Xiaomi and other industrial investors, rescued SUNING with 8.83 billion yuan and bought 16.96 percent of the shares, becoming the third largest shareholder.

After the introduction of Jiangsu state-owned assets, SUNING's business has improved, and the profit before interest and tax on Q1 this year has not been seen for a long time, but this also means that it is very difficult for Zhang and his son to "turn around." After all, an enterprise involves too many interests, and no one wants to let a person who leads the reverse development of the enterprise become the speaker again, even if he is the founder of the enterprise.

Perhaps, in Zhang Jindong's mind, the Zhang family still has a chance to "retake" SUNING, which already belongs to them, because he also has a son-Zhang Kangyang.

Left: Zhang Jindong right: one of Zhang Kangyang's current assets controlled by Zhang Kangyang is SUNING's shop, which was spun off from SUNING through various indirect investment holdings, and the other is the Inter Milan Club acquired earlier. Although Zhang Kangyang has been trying to sell Inter Milan to get back the money in recent years, he has not been able to get a satisfactory price. Fortunately, Internazionale also won a Serie A title, which has added value.

Although there are still some assets, there is also enough debt between father and son. On July 19 this year, the Hong Kong High Court ruled against Zhang Kangyang, asking him to act as guarantor to repay a loan of more than US $255 million to an overseas syndicate.

It is reported that the loan was generated by Zhang Kangyang's loan from a syndicate in order to buy a company's bonds, which is now long overdue. At the same time, overseas creditors launched a global debt collection from Zhang Jindong and his son, because this incident once again pushed SUNING into the wind.

Times make heroes, but times are always changing. Now that the tide of SUNING is gone, Zhang and his son can no longer turn the tide.

As the saying goes: when the times abandon you, they don't even say hello.

This article comes from the official account of Wechat: zinc Finance (ID:xincaijing), author: Lu Shiming Editor: Gale

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