Macy's is coming to China.
The company known for its iconic American department store has formed a joint venture with Hong Kong-based retail company Fung Retailing Limited, Macy's Inc. announced Wednesday. The joint venture is called Macy's China Limited, and beginning in late 2015, it will sell Macy's merchandise to Chinese consumers exclusively through a flagship store on Alibaba Group's Tmall Global retail platform as part of an e-commerce pilot.
"Millions of Chinese tourists have come to know and love Macy's when they travel to New York, San Francisco, Chicago and other American destinations," Chairman and CEO of Macy's, Inc. Terry J. Lundgren said in a statement. "By making Macy's accessible in China through Alibaba's Tmall Global, we have an opportunity to deepen our relationship with international customers and to grow sales."
Macy's will be the first American department store to join Alibaba's Tmall Global, according to an Alibaba press release. Alibaba's online and mobile payment system Alipay will serve as a primary payment method for the flagship store. Macy's previously launched a special Black Friday promotion in China with Alibaba in November 2014, which allowed Chinese shoppers to take advantage of select discounts from the department store and other American online retailers through a service called Alipay ePass.
Though consumers in China and in about 100 other countries around the world have been able to purchase some Macy's merchandise through Macys.com since 2011, those items were shipped from the United States. With Macy's China Limited, Macy's will ship goods from Hong Kong, which may not only help Chinese consumers get their orders more quickly and may help alleviate some of the cost, but it also gives Macy's a physical presence in China, which could help bolster the company's influence in the country. No physical Macy's stores are planned to be built in China as of now, but they are something the company may consider based on the success of this e-commerce pilot, according to the press release.
It's no secret that many companies are looking for ways to expand into the emerging Chinese market, so this new venture could be a smart move on Macy's part. With second-quarter sales for Macy's down by 2.6 percent compared with the previous year, according to the company's earnings report also released Wednesday, making a new market among Chinese consumers could be beneficial to Macy's in the long-run.
By partnering with an American company, Alibaba may also expand its reach in the U.S. and around the world. With some record-low share prices and slowed growth shown in Alibaba's second quarter earnings report released Wednesday, the timing couldn't be better.
