Taiwanese conglomerate Ruentex Group (潤泰集團) and Chinese oil giant Sinopec Corp (中國石化) last week signed a cooperation deal between their retail businesses, but synergy is likely to take time to emerge, market watchers said.
On Tuesday, Ruentex, which operates RT-Mart (大潤發) hypermarkets in Taiwan and China, as well as C-Store (喜士多) convenience stores in China, reached a strategic cooperative agreement with the marketing subsidiary of Sinopec in Beijing, a statement posted on the Chinese company’s Web site said.
The two parties have agreed to adopt joint procurement to reduce sourcing costs and improve the operations of Easy Joy (易捷) convenience stores, which are run by Sinopec, as well as gradually expand cooperation and explore e-commerce and online-to-offline (O2O) business opportunities, the statement said.
Ruentex and Sinopec might also push forward a pilot trial for their retail cooperation in Shanghai, as well as develop their own brand products together in the future, the statement said.
As of the end of last year, Ruentex Group ran 266 RT-Mart hypermarkets and 600 C-Store convenience outlets in China, as well as operating the Feiniu.com (飛牛網) e-commerce platform, while Sinopec — also known as China Petroleum & Chemical Corp — had 23,431 Easy Joy convenience stores at its gas stations in China.
Macquarie Capital Securities Ltd said the deal would likely bring closer e-commerce collaboration between Sinopec’s Enjoy365.com (易捷網) and Ruentex’s Feiniu.com. It would also create O2O operational synergies from the combination of Easy Joy outlets and Ruentex’s retail distribution network.
In the long term, the deal could benefit Ruentex’s retail and e-commerce prospects in China through Sinopec’s vast network of sales points, the brokerage said.
UBS Securities Ltd said such strategic cooperation would boost market sentiment toward Ruentex’s Hong Kong-listed Sun Art Retail Group (高鑫零售), but it may not boost Sun Art’s earnings in the short term as successful synergy between the two parties may take some time to emerge.
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