Macy's, Fung Retailing in JV for e-commerce in China
America's leading fashion retailer Macy's, Inc. has announced it has formed a free-standing joint venture with Hong Kong-based Fung Retailing Limited, a privately-held enterprise to explore retailing in China, one of the world's largest and fastest-growing consumer marketplaces, it said in a press release.
The joint venture, which is 65 per cent owned by Macy's and 35 per cent owned by Fung Retailing, will start with an e-commerce pilot. For Macy's, already a popular destination for Chinese-Americans and Chinese visitors to the US, the joint venture is expected to develop significant new learnings on customer preferences and buying patterns within China.
Under the joint venture, Macy's plans to begin selling in China in late 2015 through an e-commerce presence on Alibaba Group's Tmall Global, their premiere marketplace that connects overseas branded retailers to Chinese consumers. To be based in Hong Kong and called Macy's China Limited, the Macy's-Fung joint venture will curate a Macy's online merchandise assortment especially for Chinese customers and fulfill Tmall Global orders from Hong Kong through local logistics channels, including LF Logistics, an affiliate of Fung Retailing. Alipay will be a primary payment channel for Macy's e-commerce offerings in China.
“ By making Macy's accessible in China, we have an opportunity to deepen our relationship with domestic and international customers and to grow sales. We have been closely following the development of the Chinese marketplace for many years and have learned that success requires that we have the right partners to help us navigate the unique needs and characteristics of consumers in China,” said Terry J. Lundgren, chairman and CEO of Macy's, Inc. “Fung Retailing has deep experience and expertise in Chinese retailing, and the Macy's-Fung partnership will be instrumental to helping set up and operate our test.”
The Chinese Internet population of some 668 million is the driving force behind China's e-commerce and online shopping boom, along with the rise of a middle class forecast to number 630 million by 2022. Fung Retailing complements Macy's leadership in US omnichannel retailing with its own retail and wholesale experience in Asia, where it has more than 3,000 stores across a wide product range in various formats, including more than 1,000 stores in China.
Fung Retailing's chairman Dr. Victor K. Fung said he was delighted with the formation of the joint venture. “Macy's is not only a premier retailer in the States but also a frontrunner in omnichannel retailing. I am confident that the joint venture will be fruitful and mutually beneficial.”
“Macy's is one of the most iconic brands in the world, and we are honored they have chosen us as their exclusive partner to grow their business in China,” said Daniel Zhang, CEO of Alibaba Group. “Macy's exclusive Tmall Global flagship store is a major win for consumers across China. It reinforces Tmall Global's status as the premiere solution for brands and retailers in their strategic online presence and direct engagement with customers in China.”