There are many reasons why Alibaba paid a premium to acquire Suning Appliance, including:

1) To expand online retail business, Alibaba has powerful Internet technology and platforms, while Suning Appliance has high-quality offline stores and product supply chains. The two parties can jointly create an online and offline integrated retail model;

2) To supplement the home appliance business, Alibaba is still vacant in the field of home appliances, while Suning Appliance has a strong advantage in home appliance products. The two parties can jointly develop home appliance products and expand Alibaba's market share in the field of home appliances;

3) To optimize asset allocation, Alibaba has sufficient cash reserves, and Suning Appliance also needs financial support. The two parties can achieve a win-win situation through asset restructuring. In short, Alibaba's premium acquisition of Suning Appliance is to achieve a diversified strategy of online and offline integration, expansion of home appliance business, and optimization of asset allocation.

Alibaba did not pay a premium to acquire Suning Appliance 1. On May 20, 2016, Alibaba finally invested 28.233 billion yuan in cash, and subscribed for 1.861 billion shares of non-public offering at 15.17 yuan per share, accounting for 19.99% of Suning's total share capital after issuance;

2. On May 20 and May 27, 2016, Suning used its own funds and special bank loans to pay Alibaba all the subscription price, about US$2.146 billion, and subscribed for about 26.32 million new shares of Alibaba, accounting for 1.05% of its total share capital after issuance. Alibaba Group CEO Zhang Yong said that from today, the entire new business ecosystem integrating online and offline will be open to all brands, becoming the "water, electricity, and coal" to help brands complete digital business transformation, and will truly break the "wall" that exists between online and offline, and between brands and consumers.

Suning Cloud Commerce COO Hou Enlong said that in the next three years, Alibaba and Suning will invest at least 10 billion yuan in the plan to restructure the brand supply chain and incubate small and medium-sized enterprises.