Li & Fung, Wangfujing, Bailian to launch China chain

Wangfujing Department Store, Bailian Group and Li & Fung plan to launch a 300-strong chain of retail stores in China in a three-way joint venture.

The companies say they plan to “transform China’s retail industry” through enhancing supply chain efficiency.

Li & Fung Trading (China) Holdings, a wholly-owned subsidiary of Hong Kong listed Li & Fung said the JV would be based in the Shanghai free trade zone.

Li & Fung will have a minority 20 per cent interest in the new business, with the majority evenly balanced between the other parties.

The core business of the JV will be developing and managing private labels and licensed brands. In the first three-year plan, the JV will focus on menswear, womenswear, childrenswear and home products, developing up to three private labels and up to six licensed brands. It “may involve” the opening of up to 300 stores or store-in-stores and realising up to 1 billion yuan in sales.

Li & Fung will use its global sourcing expertise to design, source and produce private labels and licensed brands tailored to the retail partners’ requirements.

The company says the partnership reflects the increasing competition in a fast-evolving retail market and the growing importance of eCommerce which are driving Chinese multi-brand retailers to look to develop private and proprietary brands with which to differentiate themselves from competitors, increase margins and improve customer loyalty.

“In the long run, the JV aims to be at the forefront of a new breed of brand development and management companies giving strong own-brand capabilities to traditional retailers that will contribute to the transformation and sustainable development of China’s retail industry,” Li & Fung said in a statement.

“Through this strategic partnership, Li & Fung is able to extend the global supply chain into a substantial retail network that serves a large growing middle class in China,” said William Fung, group chairman.

“The joint venture aims to introduce globally sourced products that offer Chinese consumers a wider variety of foreign goods,” he added.

Shanghai Bailian Group owns more than 6 million sqm of commercial space, with 5000 sales outlets in more than 20 provinces and cities throughout China, covering a variety of retail formats including department stores, supermarkets, convenience stores, shopping malls, discount stores and franchise stores. Its general merchandise division operates 47 department stores in China, including Shanghai First Department Store, Wing On Department Store, No. 1 Yaohan Department Store, Oriental Department Store, Bailian Shopping Mall and Bailian Outlets.

Beijing Wangfujing Department Store operates 45 chain stores in various retail formats in 30 cities, including department stores, shopping malls, outlets and eCommerce.

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