The joint venture, which is 65 percent owned by Macy's and 35 percent 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 United States, the joint venture is expected to develop significant new learning 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.
Peter Sachse, Macy's, Inc. chief innovation and business development officer, said, "We have had initial success in partnering over the past year with Alibaba on various projects, including accepting Alipay on macys.com and conducting a special promotion during Black Friday 2014. We believe that, through the joint venture, Macy's online presence on Tmall Global will give us insight that will serve us well in evaluating future international initiatives."
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 forecasted to number 630 million by 2022. Fung Retailing complements Macy's leadership in U.S. 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. In addition to accumulating invaluable on-the-ground experience of the product preferences and shopping habits of Chinese consumers, Fung Retailing has focused intensely in recent years on the application of technology to the Chinese retail market, in particular to omnichannel retailing.
Macy's China Limited will be led by Kent Anderson, who will serve as managing director. Anderson is a veteran Macy's, Inc. executive and long-time president of macys.com. Ms. Fung will represent Fung Retailing's interest on the board of the joint venture company.
Macy's began selling overseas into China and about 100 other countries with an edited assortment on macys.com in 2011. These goods are shipped to international customers from the United States. In the upcoming e-commerce test, Macy's China Limited will ship to Chinese customers from inventories in Hong Kong, which is expected to improve speed, flexibility and pricing for the customer.
About Fung Retailing Limited
The retailing businesses of privately-held Fung Retailing Limited extend from Greater China to Korea, Singapore, Malaysia, Thailand, and the Philippines through a combined network of over 3,000 stores. They include stores operated separately and independently by publicly-listed Convenience Retail Asia Limited (SEHK: 00831) and Trinity Limited (SEHK: 00891), as well as the privately-held Branded Lifestyle Holdings Limited, Fung Kids (Holdings) Limited, Toys "R" Us (Asia) Limited, Suhyang Networks Company Limited and UCCAL Fashion Group. Fung Retailing employs over 18,000 staff, and its turnover exceeded US$1.8 billion in 2014. LF Logistics is a subsidiary of Li & Fung Limited (SEHK: 00494).
Note: Privately-held Fung Retailing Limited is totally separate from the publicly-listed company Li & Fung Limited.
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