Also, as previously planned and announced, 29-year Swire Resources veteran Samson Wong was appointed president of the joint venture — Columbia Sportswear Commercial (Shanghai) Company — headquartered in Shanghai.
Tim Boyle, Columbia's president and chief executive officer, said, "We are very pleased with the official launch of this new joint venture, marking the beginning of a new and deeper level of cooperation with Swire Resources.
Swire has established Columbia Sportswear and Mountain Hardwear as authentic, premium outdoor brands, founded on strong emotional connections with consumers, trusted relationships with wholesale dealers, outstanding owned retail locations, and superb operational capabilities.
"We are looking forward to pursuing what we believe are significant long-term growth opportunities, capitalizing on the continuity and expertise of the joint venture's management and employees, and their deep understanding of the China market."
The joint venture inherits the broad distribution network established over the past nine years by Swire Resources, which has acted as Columbia's exclusive distributor in China since 2004.
That network consists of 51 wholesale dealers that, at December 31, 2013, operated approximately 660 Columbia Sportswear retail locations and 47 Mountain Hardwear retail locations in 180 cities. In addition, the joint venture directly operates approximately 70 Columbia branded retail locations in 7 cities.
To promote operational continuity, at commencement, the joint venture was staffed primarily by management, administrative and retail operations personnel who transferred from comparable roles they held at Swire Resources.
Samson Wong, joint venture president, added, "I am honored to lead this team of seasoned employees. The financial and operating resources both joint venture partners are investing come at a critical time in the evolution of the dynamic, growing and increasingly competitive outdoor apparel and footwear market in China."
JB Rae-Smith, Executive Director, Trading and Industrial Division of Swire Pacific Ltd, said, "China's outdoor market is benefiting from increasing consumer affluence, greater interest in outdoor leisure activities, and increased investment from global and domestic outdoor brands. We look forward to working more closely with Columbia Sportswear to capitalize on these favorable long-term trends."
Reflecting Columbia's 60 percent ownership stake, the joint venture will be fully consolidated in Columbia Sportswear's operating results and financial position beginning with the first quarter of 2014, in accordance with U.S. Generally AcceptedAccounting Principles (GAAP). The joint venture agreement carries an initial term of 20 years. In addition to serving as joint venture partner in China, Swire Resources will continue as Columbia's independent distributor in Hong Kong and Macau.
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