Macy's U.S. will be debuting in China through Tmall Global. (Photo : Reuters)
Macy's Inc., the famous mid-range department store chain in the United States, is set to establish presence in China later this year through Tmall, a top e-commerce platform in the country.
The corporation entered into a joint venture with Fung Retailing Ltd. to delegate management of its first foray in China.
The U.S. firm will be holding 65 percent of Macy's China Ltd., while Fung Retailing will be owning 35 percent of the company. The brands will be available in Alibaba Group's Tmall Global, which bridges foreign brands and Chinese customers. The online store already has a wide range of branded items for consumers to choose from.
Officials from Macy's revealed that they are aiming to hit a sales target of around $50 million for the coming year. Operations are scheduled to be up and running by the end of 2015, they added.
Macy's chairman and CEO Terry Lundgren said that the venture will offer an array of its products that are catered specifically to Chinese consumers, while LF Logistics, a Fung Retailing partner, will be handling orders from Hong Kong.
The initiative to reach out to China was a significant move by the well-known U.S. store chain, according to retail analysts. It is different from earlier attempts of global brands, such as France's The Galeries Lafayette and the United Kingdom's Marks & Spencer Plc, since it did not involve a physical store.
Lundgren said that processing its inventories from Hong Kong allows them to offer quick, flexible and budget-friendly service to customers, who will be using Alibaba's online payment Alipay for paying the goods.
Macy's projected that there would be 630 million middle-class shoppers in China by 2022, based on data showing 669 million Internet users in the country, with most of them buying online.
China was included when the company started selling overseas in 100 countries in 2011, but the orders were often shipped to global customers from the U.S.
Despite having 790 store outlets, Macy's second-quarter group revenues this year only reached $6.1 billion, dropping 2.6 percent compared to the same period last year.
Kantar Worldpanel China's general manager Jason Yu said that Chinese customers are eager to find a more diversified portfolio of high-end brands from foreign countries, and are ready to spend for Macy's type of merchandise.
"Opening its own brick-and-mortar stores would be very expensive and risky," said Yu.
He added that Alibaba's Tmall can expose Macy's to its huge customer base quickly. However, the company will still have to face competition against present retail players who are already on e-commerce.
Amazon China also revealed on Thursday plans to open up its U.S., Japan and Europe sites to online Chinese consumers to provide more product choices.
