20 February 2019

What is Suning’s game plan with PPTV and bank license?

Suning Commerce (002024.CN) has made some eye-catching moves this year, but all seemingly little to do with its core retailing business. First, the firm applied for a private bank license and is now awaiting a nod from authorities. Then it agreed to invest US$250 million in peer-to-peer streaming video freeware PPTV, its biggest investment ever. So, the question arises: what is Suning up to?

Sun Weimin {孫為民}, president of Suning, attempted to give an answer as he told the 21st Century Business Herald: “All innovative businesses that Suning is exploring have one common theme; it is to help Suning successfully transform into an internet retailer.”

“The reason why we do banking is not because the operating profit margin of our core business is low while banking is high; we do it just because the banking business could help upgrade our traditional core business,” Sun said.

In Sun’s vision, ownership of a bank will help the company provide financial support to Suning’s upstream suppliers based on credit information derived from the active transactions and close relationships with the counterparties.

The suppliers’ access to cheaper loans may translate into lower costs and thus cheaper sourcing for Suning. That will, in turn, help the firm provide better pricing for its customers and gain a competitive advantage over rivals.

Online video supplier PPTV also fits in to the retail picture this way.

Suning announced this week that it acquired 44 percent stake in PPTV. The group is reportedly seeking ways to best integrate the new business and explore possible synergy, including interactive TV shopping through PPTV’s platform and implant advertising.

If things go well, Suning is expected to also make use of the data obtained from its e-commerce platform to provide pure credit or unsecured loan services to a broader range of borrowers over the long run.

“Pure credit loans will be the future of Suning Bank,” Sun said.

Pure credit loan is a loan issued and supported only by the borrower’s creditworthiness, rather than being backed by collateral like properties or stocks.

– Contact the writer at [email protected]



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