Li & Fung has joined forces with Chinese department stores Shanghai Bailian Group and Beijing Wangfujing Department Store to develop new private labels and licensed brands.
The two retailers, some of the largest in China, each have a 40% stake in the new joint venture, while supply chain giant Li & Fung has the remaining 20% stake.
In its first three years, the firm aims to develop up to three private labels and six licensed brands in the womenswear, menswear, kidswear and home categories. The deal could lead to the opening of up to 300 stores or shop-in-shops in China, with up to 1 billion yuan (£102m) in sales, the companies said.
The move comes as China’s fast-changing retail market is leading department stores to develop private and proprietary brands to differentiate themselves from competitors, increase margins and improve customer loyalty.
“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. “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.”
He added: “Through the introduction of private brands and exclusive brands, the joint venture will enable its retail partners to effectively increase its competitiveness by offering a different and cost effective product offering. The joint venture also aims to introduce globally sourced products that offer Chinese consumers a wider variety of foreign goods.”