ITOCHU Announces the Conclusion of an Agreement for a Capital Tie-up and Partnership with Bosideng International Holdings Limited Group in Hong Kong
April 27, 2015
ITOCHU Corporation (headquartered in Minato-ku, Tokyo; Masahiro Okafuji, President & CEO; hereinafter “ITOCHU”) announced today that ITOCHU Hong Kong Ltd. (headquartered in Hong Kong; Yoichi Ikezoe, Chairman) and Gold Stone Investment Co., Ltd. (headquartered in Beijing; Qi Shuguang, CEO; hereinafter “Gold Stone Investment”), a wholly owned subsidiary of CITIC Securities International Company Limited, have concluded a joint agreement for a strategic capital tie-up and partnership for promoting cooperation on boosting mutual corporate values with Bosideng International Holdings Limited (headquartered in Hong Kong; Chairman and CEO, Gao Dekang; hereinafter “Bosideng”), which is listed on the Hong Kong Stock Exchange. In the future, ITOCHU and Gold Stone Investment will provide funding of up to 30 billion yen for the Bosideng Group through a special purpose company that both business enterprises will set up in Hong Kong.
Bosideng is a leading Chinese apparel company that began in 1975 as a manufacturer and seller of down wear that currently has about 10,000 stores across China. The corporation has maintained the largest share of sales of down wear, its original business, in the Chinese market for many years. In recent years, the company has also expanded business to ladies apparel and has achieved a stable performance against the background of strong economic growth in China. With the Chinese economy maturing in recent years, Bosideng aims towards further growth by expanding into areas other than down wear with a focus on the comprehensive apparel business as a significant pillar of growth strategy and through differentiating itself from competitors by strengthening planning and development capabilities.
ITOCHU has set the promotion of a downstream strategy for its textile business in emerging markets, mainly in Asia, as one of its key strategies. For the Chinese market, consumption can be expected to increase mainly in inland areas against the background of improvement in the purchasing power of middle-income households. In response to this situation, ITOCHU aims to build good sales channels especially in the casual wear and lifestyle areas. Based on the recognition that it is important to build a cooperative structure with strong local partners to accelerate its advance into the retail business in the huge Chinese market, ITOCHU decided to enter into partnership with Bosideng, which has developed sales networks even into Chinese inland areas.
ITOCHU and Bosideng determined that they would be able to further promote their strategies by mutually utilizing management resources in partnership and decided to enter into a capital tie-up that is not merely a business alliance. ITOCHU has already agreed to introduce several brands it holds to Bosideng and will fully utilize Bosideng’s sales networks to accelerate new projects for the brand business. In addition, both companies in partnership will increase profits in the Chinese market by acquiring and introducing Western brands. ITOCHU regards its recent partnership with Bosideng as a significant pillar of strategy for the fashion and lifestyle business in the Chinese market and aims to attain profitability from the first year with the synergistic target of achieving about 25 billion yen in three years and about 40 billion yen in five years on Bosideng’s sales basis.
The CITIC Group, with which ITOCHU entered into a partnership and capital tie-up, will also participate in business expansion from here on in. By strengthening sales promotion and differentiating a business model through the full use of the CITIC Group’s overwhelming comprehensive financial services, including retail finance, and networks in China, ITOCHU aims to accelerate business expansion with this joint project with Bosideng and the CITIC Group. In addition, ITOCHU will also continue to accelerate the realization of synergies in many business areas in cooperation with the CITIC Group.