Macy's enters joint venture with Fung Retailing to test e-commerce in China

Macy’s, Inc. (M) announced Wednesday it has formed a free-standing joint venture with Hong Kong-based Fung Retailing Limited to explore retailing in China, one of the world’s largest and fastest-growing consumer marketplaces.

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.

Macy’s, a popular destination for Chinese-Americans and Chinese visitors to the United States, expects to develop significant new learnings on customer preferences and buying patterns within China, as per the company’s release.

“Millions of Chinese have come to know and love Macy’s when they live in the United States or travel to New York, San Francisco, Chicago and other American destinations. By making Macy’s accessible in China, we have an opportunity to deepen our relationship with domestic and international customers and to grow sales. We have been closely following the development of the Chinese marketplace for many years and have learnt that success requires that we have the right partners to help us navigate the unique needs and characteristics of consumers in China,” said Terry J. Lundgren, chairman and chief executive officer of Macy’s, Inc.

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.

The Macy’s-Fung joint venture will curate a Macy’s online merchandise assortment especially for Chinese customers and fulfil Tmall Global orders from Hong Kong through local logistics channels, including LF Logistics, an affiliate of Fung Retailing.

The Chinese business will be based in Hong Kong and called Macy’s China Limited, Alipay will be a primary payment channel for Macy’s e-commerce offerings in China.

“Fung Retailing has deep experience and expertise in Chinese retailing, and the Macy’s-Fung partnership will be instrumental to helping set up and operate our test.”

Likewise, 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.”

Fung Retailing’s Chairman Dr. Victor K. Fung said he was delighted with the formation of the joint venture. “Macy’s is not only a premier retailer in the States but also a front runner in omnichannel retailing. I am confident that the joint venture will be fruitful and mutually beneficial.”