Carrefour China Given State-owned Funding Amid Bankruptcy Speculation
Supermarket chain Carrefour China, affected by the impact of e-commerce and the epidemic, reached a cooperation agreement with a state-owned facility in East China’s Anhui Province on February 20 to help with its business upgrading. However, the retailer is already in turmoil, and its future is uncertain.
Carrefour China’s financial report shows that from 2020 to 2021, its net loss increased from 795 million yuan ($114 million) to 3.337 billion yuan. In the first half of 2022, the net loss was 471 million yuan.
Since 2022, Carrefour China has seen many of its stores close up, including a 22-year-old store in Beijing in addition to a store known as “Carrefour’s largest flagship store in Asia”. In the first three quarters of 2022, the company closed 54 stores, leaving only 151 stores in operation. The number was 210 in 2019 when retail corp Suning.com acquired an 80 percent stake in Carrefour China from the French retailer group.
Facing China’s rapidly growing e-commerce sector, Carrefour China has actively sought transformation, such as the convenience store business in 2014, and online e-commerce business in 2015. After Suning.com became its controlling shareholder, it launched its first member store in China in 2021 and said that it would upgrade more than half of its domestic stores to member stores. However, the plan has progressed slowly, and only two member stores have been opened in Shanghai.
Since January this year, a number of consumers complained that they were unable to pay with the supermarket’s shopping cards and value cards, with some interpreting it as a sign of problems at the retail company. The firm denied online speculation about closure, adding that it was upgrading its supply chains.
According to Tianyancha, a commercial information query platform, among the litigation cases related to Carrefour China’s supply chain in the recent five years, the cases in 2022 accounted for the largest proportion. Twenty of those cases from last year involved sales contract disputes, most of which were debt collection by suppliers.
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Media outlet Times Weekly quoted Lai Yang, a member of the Expert Committee at the China General Chamber of Commerce, as saying, “At present, the development of Carrefour China is only upgrading to the existing supermarket format. The introduction of state-owned assets won’t help a lot.” Lai thought that Carrefour China should study its own resources and then apply them to a larger transformation. For example, Sam’s Club in China excels in chilled products, which appeal to many consumers.
According to a report by Jiemian News, in the view of an investor who has contacted Carrefour China, the core of the transformation failure lies in the poor management of Suning.com. Another person in the retail industry revealed that the funds announced by Carrefour China have not yet been put in place, and the statement is more likely to be a strategy to stabilize the situation.
In fact, Carrefour China’s current situation is very similar to Missfresh, a fresh grocery e-commerce company. Missfresh’s capital chain had been tight due to long-term losses. In order to boost the company’s stock price, a financing announcement was issued in July last year. However, less than half a year after the announcement was issued, Missfresh collapsed.