American department store giant Macy’s plans to set up a virtual store on Alibaba’s Tmall Global in a bid to enter China’s lucrative online retail market.
For this endeavour, it has partnered with Hong Kong’s Fung Retailing Limited to help it sell a curated list of products to the Chinese market starting at the end of this year.
“We are very excited to be working with such a great partner to begin to build a business at one of the world’s largest and fastest growing consumer marketplaces,” said Macy’s CFO Karen Hoguet.
The joint venture firm, known as Macy’s China Limited, will be 65 per cent owned by the Cincinnati-based retailer, while the rest will be held by Fung. The partners are expected invest about US$25 million to fund the business over the next year and a half.
In addition to boosting Macy’s global reach, the move is also expected to help the company’s business in the United States by raising Chinese tourists’ awareness of the brand.
“By making Macy’s accessible in China, we have an opportunity to deepen our relationship with domestic and international customers and to grow sales,” explained Macy’s CEO Terry J. Lundgren.
The plan to grow the retail chain’s profits follows the disappointing financial results noted in the second quarter, which ended August 1.
During this period, Macy’s revenue dipped by 2.6 per cent to US$6.1 billion, compared to US$6.26 billion in the same period last year. Meanwhile, net profit dropped to US$217 million from US$292 million.