E-commerce firm Alibaba has made a RMB4.5bn ($717m) investment in Huitongda Network, a spinoff from China-based retail chain Jiangsu Five Star Appliances, The Paper reported on Tuesday.
Founded in 2010, Huitongda provides e-commerce and marketing services to a network of about 80,000 rural brick-and-mortar retailers across 15,000 towns in a total of 18 Chinese provinces.
Local retailers get the ability to sell items to a wider market through an established e-commerce platform, while online merchants can access rural customers more directly.
Alibaba supplied the funding through a strategic partnership deal that will involve the companies collaborating on technology, logistics, warehousing and supply chains.
The partnership will support one of the three prongs of an expansion strategy Alibaba identified in 2015, according to CEO Daniel Zhang: growth in rural areas.
Alibaba’s rural strategy involves combining the internet and big data technology with established e-commerce, financial and logistics systems. Subsidiary Taobao plans to set up service centres in 100,000 villages in the next three-to-five years through a venture called Rural Taobao Partners.
Huitongda received approximately $76m from private equity firm US-China Green Fund in December 2017, two years after securing $77m from insurance firm Huaxia Life and Jiangsu Coastal Capital. Smartphone maker Xiaomi is reportedly also an investor.