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HK's Li & Fung sets up China JV, targets 300 stores
HONG KONG, June 23
HONG KONG, June 23 Global exporter Li & Fung Ltd has formed a joint venture with two Chinese department store operators, with the aim of setting up as many as 300 stores and developing its own private labels, the Hong Kong firm said on Tuesday.
The firm will own 20 percent of the joint venture, while Beijing Wangfujing Department Store Group Co Ltd and Shanghai Bailian will each hold a 40 percent stake.
The joint venture, which will be called BaiFuLi Co Ltd, may help Li & Fung to make up for some of the business it recently lost from U.S. retail giant Wal-Mart Stores Inc. Li & Fung reported an 11.8 percent fall in 2014 net profit in March.
BaiFuLi will have a registered capital of 48 million yuan ($7.7 million).
Li & Fung said developing proprietary brands would help the joint venture differentiate from rivals "amid increasing competition in a fast-evolving retail landscape".
"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," William Fung, Group Chairman of Li & Fung, said in the statement.
The venture aims to develop between one and three private labels and up to six licensed brands over a three-year period, it added. This could see the venture opening up to 300 stores and pulling in up to 1 billion yuan ($161 million) in sales.
The Hong Kong-based exporter lost some business in May from Wal-Mart and handbag maker Kate Spade & Co, after the two companies decided to bring in-house some of the product sourcing that has been handled by Li & Fung. (Reporting by Donny Kwok and Adam Jourdan; Editing by Anand Basu)
