Gap sells China business to Baozun for $40 million; hopes to expand local partnerships
Bringing an end to its 12-year foray in the region, San Francisco-based Gap has finally given a green signal to sell its Greater China business to Chinese e-commerce services provider Baozun Inc for a deal closing up to $50 million.
While the deal is expected to close by mid-2023, Baozun will be acquiring the China and Taiwan-based unit in an all-cash transaction with a primary consideration of $40 million with further adjustments within a limit of $50 million. Through the franchise agreement, the Chinese provider will operate Gap’s in-market site and other stores in the region.
Gap hopes to connect more with Chinese customers through the deal
As per a press release issued by Gap, it said that the decision to sell off its China business came as a part of its strategic business review of the company’s worldwide businesses. It would further allow Gap “to serve the market via a more asset-light, cost-effective model and to benefit from the local and technology expertise of Baozun.”
Gap President and CEO Mark Breitbard, while speaking about the deal, said that the local partnerships with market experts like Baozun will not only help to connect with new and existing customers but will also provide them with personalised and service-oriented experiences.
On the other hand, Baozun has also made an announcement about launching Baozun Brand Management, a new venture to manage and grow more retail brands in the region.
After operating its business for more than 12 years now in Greater China, Gap has been hoping to expand and resonate more with its Chinese customers through the new deal. It is pertinent to note that Gap has been struggling with a fall in sales at its flagship brand and more recently with its problems at its Old Navy chain. It was also affected by China’s zero-tolerance policy due to COVID-19 and restrictions that came down hard on businesses in the country.