Li & Fung sets up China retail JV

Global exporter Li & Fung Ltd has formed a joint venture with two Chinese department store operators, with the aim of setting up as many as 300 stores and developing its own private labels, the Hong Kong firm said on Tuesday.

The firm will own 20 percent of the joint venture, while Beijing Wangfujing Department Store Group Co and Shanghai Bailian will each hold a 40 percent stake.

The joint venture, which will be called BaiFuLi Co, may help Li & Fung to make up for some of the business it recently lost from US retail giant Wal-Mart Stores Inc.

Li & Fung reported an 11.8 percent fall in 2014 net profit in March.

BaiFuLi will have a registered capital of 48 million yuan ($7.7 million).

Li & Fung said developing proprietary brands would help the joint venture differentiate from rivals “amid increasing competition in a fast-evolving retail landscape.”

The venture aims to develop between one and three private labels and up to six licensed brands over a three-year period, said the company.

This could see the venture opening up to 300 stores and pulling in up to 1 billion yuan ($161 million) in sales.