By LAN Liqi

Property developer Xiamen C&D Inc. has become the largest stakeholder in Red Star Macalline after spending 6.3 billion yuan (US$871.6 million) to take control of almost a third of the building materials and furniture retailer's equity.

RSM sells building materials, operates logistics services and owns shopping malls all over the country. Furniture and home decoration goods are marketed under the company's own brand.

Since the acquisition, C&D holds 30 percent of RSM, making it the largest shareholder. Macalline’s previous parent Red Star Group is now the second-largest with 25 percent of equity shares.

RSM was founded by entrepreneur CHE Jianxing who built the company from scratch. Che was once the epitome of China’s rising entrepreneurs. Born to farmers in Jiangsu province, Che did not complete junior high school and became a carpenter before starting a furniture business with 600 yuan borrowed from a relative. With the acquisition, Che is no longer the controlling shareholder.

C&D’s largest shareholder is the state assets administration of Xiamen, a vibrant coastal city in east China’s Fujian Province. Xiamen was one of the first cities to open up to foreign trade and investment during China’s reform and opening up. In 1981, it became one of just four special economic zones allowed to relax restrictions on international trade and investment.

C&D is a service-type enterprise with real-estate and supply-chain operations as its main businesses. It is best known for residential property development. Xiamen C&D was listed Shanghai Stock Exchange in 1998. In 2022 it realized operating revenue of 833 billion yuan with an after-tax net profit of 11.3 billion yuan.

On January 13, C&D moved to acquire Macalline and five days later, four Macalline executives resigned, two of them members of Che’s immediate family, replaced by three executives from C&D. Che has since said that he plans to step down as chairman but expects to remain as CEO.

Last year, Xiamen C&D began expanding its high-end home appliance retail business while pestering EV makers to set up sales booths in its stores. Xiamen C&D covers the whole product chain, from design and R&D, procurement, manufacturing and warehousing to logistics. Word is that the company considers Macalline locations ideal places to tout high-tech BBQs and cars.

EVs are already been sold – to some extent - in all kinds of stores from custom-built demonstration zones to hole-in-the-wall phone shops, so this conflation with sofas and robot vacuums comes as no surprise.

But the wishful thinking has not so far been realized. Macalline malls generally occupy a very big area, but few are in prime locations. They are to be found dotted around ring roads and close to final subway stops.

A Macalline employee in Guangdong Province told Jiemian News that in June last year, long before the acquisition, the company had begun its flirtation with car makers. The relationship did not get off to a great start, the only progeny being a car-audio store in the mall.

As of the end of 2022, C&D's total assets amounted to 665 billion yuan and with net assets of 165 billion yuan. Macalline stock fell 0.86 percent on Monday and rose by 1.47 percent Tuesday to close at 4.74 yuan, a market cap of 19 billion yuan.