Alibaba bolsters home improvement push with $635 million investment in RSM

Chinese tech giant Alibaba Group has invested RMB 4.36 billion (around $635 million) in furnishings retailer Red Star Macalline () in an exchangeable bond subscription for 10% of common shares.

Under the deal, the two companies will cooperate in the areas of home improvement and furniture shopping malls, shopping centers, and other business areas. The e-commerce company also acquired 3.7% of the furniture retailer’s Hong Kong-traded shares.

One of the largest home improvement and furnishings shopping mall operators in China, Red Star Macalline operates more than 300 shopping malls across the country as of end-March. In addition, the company also operates a total of 364 home improvement centers through franchises.

“The in Red Star Macalline, China’s leading home improvement and home furnishing shopping malls, underscores Alibaba’s commitment to providing Chinese consumers the highest quality experience when shopping for home-related products and services,” an Alibaba spokeswoman told TechNode on Thursday.

Home improvement and furnishings is an important segment for Alibaba’s “new retail” strategy. The e-commerce giant has been seeking out traditional offline retailers to digitize their by offering technology supporting online consumer reviews, inventory tracking, supply chain management, and mobile payment solutions.

As of the end of 2018, the size of China’s online home improvement market reached RMB 418.54 billion, a 34.9% year-on-year increase, according to a report (in Chinese) from Qianzhan Industry Research Institute. The report predicted that the figure will surpass RMB 500 billion in 2019.

In addition to operating an in-house home decoration platform Jiyoujia, the Hangzhou-based company owns stakes in a series of leading furniture chains in the country, such as Easyhome, and online home decoration service platforms like Many Craftsmen and Shengong 007.

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