Global sourcing leader Li & Fung may be looking to aid Chinese department stores in creating their own clothing collections.
According to Bloomberg, sources familiar with the matter said Li & Fung will form joint ventures with Shanghai Bailan Group Co. and Beijing Wangfujing Department Store Group Co. to develop private label lines.
Li & Fung would also help source their products, license and manage the brands.
The new endeavor could help the sourcing company draw on demand from China’s growing middle class.
Bloomberg Intelligence analyst Catherine Lim said Li & Fung brings its experience with overseas retailers to the Chinese retailers. “One of the challenges of building private labels in China lies with the marketplace, which is highly fragmented and already crowded with many brands,” Lim told Bloomberg.
Sources said the apparel brands will cover the menswear, womenswear, children’s clothing and home product categories.
Lim said roughly 70 percent of department store operators are starting to develop their own private lines, like Golden Eagle Retail Group Ltd., though some are hampered by their geographical presence.
“It’s a fairly new business for them,” Lim told Bloomberg. “It’s easier said than done because it requires investment. Until there’s enough scale, it probably wouldn’t make a lot of money.”