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Why Lenovo’s parent company is pouring money into O2O liquor business


Jiubianli’s offline worker is making a delivery. Photo from Baidu Images.

The parent company of Lenovo, China’s PC market leader, laid out their latest strategy to further explore the liquor O2O sector by confirming their latest investment.

Legend Holdings, Lenovo’s parent company, in January injected RMB 230 million (USD 35 million) into Jiubianli, or “Instant Liquor”, an O2O liquor provider in central China’s Zhengzhou city.

Zhu Yonghua, the director of Legend Holdings’ modern agriculture and food investment department, revealed the reasons for the investment, the 21st Century Business Herald reported on Wednesday.

He said the liquor industry saw a total of RMB 800 billion in revenue in 2014, and the O2O liquor website that Legend Holdings just invested in has a valuation of RMB 300 billion. Jiubianli has dominated liquor supply channels in the catering sector and traditional tobacco and liquor shops. The website also features a 20-minute delivery service which has proven attractive to customers.

Investment in the liquor industry is one of Legend’s development strategies. Liu Chuanzhi, Legend’s honorary president and former CEO, said in a summit in December 2015, as the mobile Internet rises, the company needs to explore more businesses to maintain their revenue growth.

Legend Holdings has so far made more than one large investment in the liquor industry since 2011.

The company’s subsidiary, Funglian Holdings, purchased four liquor companies from 2011 to 2012. The subsidiary’s revenue in the first half of 2015 reached RMB 620 million with a 5% YOY growth. In 2013, the company’s subsidiary Joyvio Group entered the wine industry. Wine sales of the group increased by 50% in 2015 from a year earlier.

The Chinese liquor e-commerce market is still growing and has a lot of room to expand. Offline sales still dominate the liquor industry while online sales make up only 1% of total sales, Chinese market research agency Analysys reported in July 2015.

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