Ted Baker enters joint venture to expand in China
British men’s and women’s lifestyle brand Ted Baker has agreed a joint venture (JV) with Shanghai LongShang Trading Company Ltd. to expand the brand in mainland China, Hong Kong and Macau.
The JV will drive the long-term expansion of Ted Baker in those markets, combining local knowledge and expertise with the proven buying, merchandising and brand-building knowledge of Ted Baker.
LongShang will assign its rights under the JV to a newly incorporated Hong Kong investment vehicle to be wholly owned and formed by LongGoal Holdings Co Ltd. and Infra-Apparel Group. LongGoal and Infra together bring a wealth of experience in digital marketing, ecommerce operations and building successful joint ventures in China.
LongGoal currently operates as a successful retail distributor for Gant AB, operating more than 165 directly owned and 25 sub-franchised locations in China, as well as 44 directly owned and franchised Bebe stores.
Lindsay Page, acting CEO of Ted Baker, said: “Over recent years we have invested in introducing the Ted Baker brand to Chinese customers, and we are confident that the creation of this joint venture will build on this platform and deliver meaningful long-term growth. We firmly believe that China has the long-term potential to become one of the largest single global territories for the Ted Baker brand.”
Commenting on the new JV agreement, Chen Xiaoling, chairwoman of LongGoal, added: "Ted Baker's global lifestyle appeal has resonated well in China, and we are confident in our ability to amplify the brand's growth. In over 20 years, LongGoal has amassed an infrastructure and presence in more than 65 cities, which presents a strong, compelling and proven platform that Ted Baker can leverage.”
Ted Baker’s net cash contribution is anticipated to be in the region of £3.4m. As part of the deal, Ted Baker will transfer its operations in China and Hong Kong into the new JV and, as a result of this, anticipated transaction related costs at completion will be approximately £6.5m. These are mainly non-cash and include the amount of stock and tax assets that will transfer over.
The JV is expected to be marginally enhancing to Ted Baker Group profit before tax in the current financial year. It’s a positive step for the brand in light of the recent departure of founder and former CEO, Ray Kelvin.