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Neiman Marcus Struggles in Chinese Luxury Market; Sells Hong Kong-based Glamour Sales

Chinese consumers want luxury items but at discount prices, and Neiman Marcus says that proposition doesn’t work for them.

Dallas-based Neiman Marcus is therefore selling its 44 percent equity in Hong Kong’s Glamour Sales Holding Ltd. after its partnership with the Chinese firm didn’t produce the desired numbers, and produced red ink instead. Dollar loss figures were not disclosed.

At the root of the Dallas-Hong Kong partnership that didn’t pan out are value-conscious Chinese consumers looking for online bargains for high-end products. “Chinese consumers are going online to get a good deal,” Olivier Chouvet, co-founder and chief executive of Glamour Sales, said in a statement to the media.”If there’s no motivation on price, you can’t convert them,” he said.

As Neiman Marcus steps away, Glamour Sales, which is buying back its equity from its former partner, plans to stimulate growth by increasing operations in Chinese cities and concentrating on mobile apps to increase sales. Glamour Sales’ marketing strategy features short-duration online “flash sales” that offer merchandise at discount prices for a limited time. Consumers must buy quickly or lose the bargain-priced deal.

Flash sales are currently offered in 1,100 Chinese cities, with Glamour Sales planning to add another 900 cities by 2017. Drawing upon a hefty number of Japanese consumers as well as the Chinese contingent, Glamour Sales expects combined sales of $500 million by 2017. Glamour Sales’ ambitious projects will be partially funded by a new infusion of investor cash from Chow Tai Fook Enterprises and London-based Investec Bank PLC, asset management specialists.

Despite the breakup with its Chinese partner, Neiman Marcus is not giving up on the Chinese luxury market, and continues to sell from its international web site. Goods are shipped to China from the U.S.