The Chinese subsidiary of Hong Kong based Li & Fung signed a strategic partnership with two of China’s largest retail groups, Shanghai Bailian Group and Beijing Wangfujing Department Store.
A Li & Fung press release informed that the strategic partnership has been done through setting up a joint venture (JV) in the Shanghai Free Trade Zone.
Li & Fung holds 20 per cent stake in the JV, with the Bailian Group and Wangfujing Department Store holding 40 per cent each.
Under the terms of the partnership, Li & Fung will provide expertise to design, source and produce private labels and licensed brands tailored to the requirements of Bailian Group and Wangfujing.
According to Li & Fung, the JV combines the strengths and capabilities of two of China’s largest retailers, Bailian Group and Wangfujing Department Store and global supply chain manager, Li & Fung.
Chinese multi-brand retailers are looking to develop private and proprietary brands so as to differentiate themselves from competitors, increase margins and improve customer loyalty.
The key business of the JV includes facilitating the development and management of private labels and licensed brands.
In the first three-year plan, the JV will focus on the development of product categories including menswear, womenswear, children’s wear and home products.
It will develop between one and three private labels and up to six licensed brands over this three year period, and may involve the opening of up to 300 stores or store-in-stores and realise up to 1 billion Yuan in sales.
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.
“We are excited to join forces with two of China’s largest retail companies to bring forth the transformation of China’s retail industry,” said William Fung, group chairman of Li & Fung.
He added, “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.”
Through the introduction of private brands and exclusive brands, the JV will enable its partners to effectively increase their competitiveness by offering a different and cost effective product offering.
The JV also aims to introduce globally sourced products that offer Chinese consumers a wider variety of foreign goods.
Li & Fung specialises in responsibly managing supply chains of high-volume, time-sensitive goods for leading retailers and brands worldwide from more than 300 offices across 40 economies.
