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Spanish retail firm DIA to exit from Chinese market

RBR Staff Writer Published 04 April 2018

Spanish retail company DIA said that it is exiting the Chinese market, with the divestment of its operations in Shanghai to Nanjing Suning.Com Supermarket LTD, company part of Suning.

As part of the deal, DIA will sell 100% of shares of the Chinese entities Shanghai Dia Retail and DIA (Shanghai) Management Consulting Services to the company.

Once the transaction is completed, DIA will completely exit from the Chinese market.

The transaction is still subject to the approval from the Chinese antitrust and regulatory authorities. Details about the value of the transaction were not disclosed by both the parties.

DIA Group is said to have gradually exited the Beijing market five years ago by closing down 160 stores. It still operates about 400 stores in Shanghai's area, with dull sales.

Last year, DIA reported gross sales of €10.3bn, which is a 1.5% increase compared to 2016’s sales. The company is said to have sustained €26.68m in continued losses in its Chinese operations.

DIA entered the Chinese market back in 2003. In the highly competitive retail market, the company’s income had fallen by up to 9% last year to €181m.

Suning stated that acquiring DIA Tiantian’s physical outlets could reduce its operational costs in Shanghai and fit well with its community store strategy.

Presently, Suning’s convenience stores are available across 43 cities, which offer lifestyle services and fresh food for nearby residential neighbourhoods. The company aims to open 1500 community stores by the end of this year.

These smaller stores are quite opposite from Suning’s malls and supermarkets, which are located in commercial areas and offer a range of goods including clothes, electronic devices.

The retail industry in China is said to be putting emphasis on smaller facilities that are closer to communities. Walmart is set to open a new small-format store in Shenzhen this week.

Image: Dia shop in Beijing. Photo: Courtesy of Popolon/Wikipedia.org.