Suning sets up R&D shop in California

Updated: 2013-11-20 09:20

By CHEN JIA in San Francisco (China Daily USA)

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Expecting more tax revenue, local employment and future acquisition opportunities, Silicon Valley rolled out the red carpet on Tuesday for Suning, a Chinese privately owned retail giant.

"We are very pleased Suning is establishing its R&D center in California. We have a lot to offer and look forward to working with them," Brian Peck, deputy director of the governor's office of business and economic development, said at the grand opening ceremony the new Suning facility on Tuesday.

With an initial investment of $5 million, Suning's Silicon Valley R&D center will serve as the company's US hub for science and technology. Starting with 50 staff members in 2014, Suning plans to expand the staff to 200 by 2017.

"Thanks to companies like Suning, the world is becoming interconnected. We expect more innovation and job creation by Suning in near future," Jim Wunderman, CEO of the Bay Area Council, said on Tuesday.

"It is only the first step of our US strategy. Suning plans to set up more institutes in New York and Seattle in the future," Zhang Jindong, chairman of Suning Holdings Group, said on Tuesday.

The Silicon Valley R & D center will leverage big data, high performance computing and the cloud to deliver a more personalized and targeted shopping experience from whatever entry point customers choose, Zhang said.

He said Suning's move to Silicon Valley would promote China-US cooperation in science and technology and business, including project research, business cooperation, enterprise M&A and investment.

"It would help the US high tech companies better approach the booming consumer market in China, which is experiencing a new round of urbanization," he said.

In 2012, the rate of urbanization in China was almost 53 percent, far lower than the 95 percent in developed countries. "So there is huge growth potential," he said.

During the last five years, total retail sales of consumer goods in China has been growing at the average rate of 16.3 percent per year, which makes China the second-largest retail market in the world.

Last year, the average per capita income in China was $6,100. In 2020, it is expected to reach $8,800, or possibly $12,700, analysts say.

Established in 1990, as a single store selling air conditioners, Suning has grown into a giant of the global e-commerce retail industry, with 1,600 stores and 180,000 employees in 600 cities throughout the Chinese mainland, Hong Kong and Japan. The company's revenues exceed $37.7 billion.

By 2020, Suning aims to become one of the world's leading retailer brands with its own revenue and third-party sales through Suning projected at $100 billion and overseas sales to reach $10 billion.

Sun Weimin, vice-chairman of Suning, said the company follows a business model that builds on the continued growth of both its physical and online storefronts.

"Our current cloud-based technology platform helps manufacturers, distributors and retailers offer a seamless and scalable experience to individuals, families and large-scale enterprises through logistics, financials and marketing," he said.

On Tuesday, deputy mayor of Palo Alto Nancy Shepherd and Silicon Valley technology leaders applauded the opening ceremony of Suning's Silicon Valley R&D center.

"Suning has always been the pioneer enterprise that applies IT technology well in the Chinese retail industry," Roy Kong, board director of US-China association of high level professionals, said on Tuesday.

"It's a step of globalization for Suning to come to the United States. A good strategy for Suning to start with an R&D center," he added.

On Wednesday, Suning's Chairman Zhang Jindong will make a speech about the trends and innovations shaping the Chinese retail sector at Stanford University.

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Zhang Qidong contributed to this story