Bebe's getaway into China raises questions about timing

Many in the trade have raised their eyebrows when they heard that Bebe stores inc. has decided to venture into Greater China, Hong Kong, Macau and Taiwan. The first boutique is expected to open in the summer of 2016.

“As we continue to expand our international footprint, our entrance into Greater China is a significant opportunity to accelerate that growth and reinforce bebe as a global lifestyle brand for women. We look forward to working closely with the Longgoal team, who have a proven track record of success and operational experience in introducing high profile retail brands to this key market,” said Jim Wiggett, Chief Executive Officer of bebe stores, inc.

Bebe stores, inc. (Nasdaq:BEBE) has recently announced that it has signed a strategic cooperation agreement with Longgoal LLC, a leading Shanghai-based agency of international high-end brands.

The agreement includes a five-year exclusive license and will see Longgoal open a minimum of 60 points of sale in Mainland China, including free standing boutiques and bebe shop-in-shops and identify third party retailers in certain provinces of China to sub license the brand for retail operations.

As advanced by both parties, Longgoal is currently identifying potential locations in Shanghai and Beijing, including flagship boutiques. After the five-year exclusive term, Longgoal retains an option for an additional 10 year partnership with bebe based on performance.

“Bebe is truly an iconic affordable luxury brand and one that we are honoured to have the opportunity to introduce to women across Greater China in a variety of ways. As style and design are among the top priorities for sophisticated woman in China, we are confident that bebe’s bold design and contemporary fashion will appeal to the ever-changing lifestyle of the confident and sexy modern Chinese woman,” said Madam Celine Chen, Chairwoman of Longgoal LLC. “With our local market expertise and bebe’s creative vision, we’re confident that we will build excitement for Bebe’s trendy feminine designs and create demand for the brand across China.”

Even if bebe plans to locally design and develop up to 30 percent of the product for China to create trendy fashion styles to reflect the local fashion and suit the bebe woman’s lifestyle in China, its decision to try its luck in such a troubled market when the economic recession is hitting at it worse, has raised some concerns amongst industry experts.

The US apparel chain, which has struggled with weak sales in its home country, is expanding into the Asian nation in search of growth.