Gap to Sell China Units to E-Commerce Firm Baozun

A sign hangs outside a GAP clothing retail store in this file photo from May 13, 2016, by Mike Segar, Reuters.

US retailer giant Gap Inc has agreed to sell its Greater China units to Baozun Inc, the e-commerce firm said on Tuesday.

China’s Baozun said its would acquire Gap Taiwan and Gap Shanghai, for a sum of $40 million. The transaction is subject to regulatory approval and expected to be effective in the first half of 2023, Baozun said.

The Shanghai entity reported a net loss after tax of 256 million yuan ($35.34 million) for 2021, compared with 456.3 million yuan a year earlier, Baozun said in a filing. The Taiwan entity reported a post-tax net loss of T$199.8 million ($6.24 million) for the year ended January 29, 2022.

China Woes

Dealmakers have seen opportunities for merger and acquisitions involving multinational firms that look to spin off their China units, as the growth outlook in the country has been hit by strict Covid-curbs, which remain uncertain amid intensifying competition with domestic brands.

Earlier this year, American fast fashion retailer Forever 21 made its third effort to enter China after having left the market twice, while major sportswear companies Nike and Adidas lost ground to local brands Li Ning and Anta in recent years.

Separately, Baozun said Gap has granted it an exclusive right to manufacture and sell its products in Greater China area.

The arrangement can last two decades, with an initial term of 10 years that can be renewed twice for each five-year term.

Reuters, with additional editing from Alfie Habershon

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Alfie Habershon

Alfie is a Reporter at Asia Financial. He previously lived in Mumbai reporting on India's economy and healthcare for data journalism initiative IndiaSpend, as well as having worked for London based Tortoise Media.