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Sun Art to deploy Alibaba business model in stores

Hong Kong-listed Sun Art Retail Group Ltd. said Dec. 8 that it entered into an agreement with Alibaba Group Holding Ltd. unit Alibaba Zetai to use its business model across the Chinese hypermarket operator's stores.

Sun Art said in a statement to the Hong Kong Stock Exchange that it expects the tie-up to offer benefits from the Chinese e-commerce giant's digital ecosystem. The move comes just weeks after Alibaba agreed to purchase a 36.16% stake in Sun Art for HK$22.4 billion.

Under the new deal, Sun Art and its subsidiaries, Auchan China and RT Mart China, agreed to adopt Alibaba Zetai's "Taobao Daojia" model with an aim to boost the efficiency of the group's traditional hypermarkets and supermarkets.

The business model utilizes internet technologies as well as traffic from Alibaba's Chinese online marketplace Taobao. It also comprises an online platform, sharing of transactional data, checkout equipment and hardware, last-mile delivery services for products sold online, procurement or sourcing assistance and usage of the Alibaba-affiliated payment platform Alipay.

In exchange, Sun Art will pay Alibaba Zetai a fee set at a fixed percentage of the value of transactions completed through the online platform. No amounts were disclosed.

Sun Art's shares rose following the announcement to close Dec. 8 at HK$8.25, up 7.14% from the previous day's HK$7.70.