Stephen Tan from Beijing leaves a Macy's store in New York. He said his friends recommended Macy's to him, and he likes the store's choice of high-quality brands. [Photo/China Daily]

Western retailers find nation's e-commerce market 'irresistible'

China's e-commerce market is proving irresistible to Western retailers, including the giant Macy's Inc, which is investing $15 million in the Chinese online seller VIPStore Co in a venture also supported by the investment arm of the US-based chip maker Intel Corp.

Besides acquiring a minority stake in VIPStore, Macy's will begin selling private-label merchandise in China next spring on Omei.com, a website that is operated by VIPStore and sells Western luxury and fashion goods.

Macy's, in announcing its deal with Intel Capital on May 23, said this is its first foray into a foreign market. Another division of the company, the high-end retailer Bloomingdale's, operates two stores in Dubai.

E-commerce sales in China are expected to reach $169 billion this year, according to a recent forecast by Forrester Research analyst Zia Daniell Wigder. The biggest online market in the Asia-Pacific region will likely bolster that status with yearly sales growth of at least 20 percent, reaching $356 billion in 2016, the report said.

The deal with VIPStore will give Macy's a means of learning more about Chinese consumers' shopping habits and preferences, said Terry Lundgren, Macy's chairman and chief executive officer.

"Our relationship with VIPStore will allow us to gain additional experience in the fast-growing Chinese market, and to better understand how consumers across China interact with Macy's and the products we sell," he said.

Founded in 2009, VIPStore is one of the leading online retailers of luxury brands in China. It also operates Jiapin.com, which sells high-end goods at a discount for certain periods of time.

The Macy's section on Omei.com will offer its INC brand of women's and men's apparel before adding other private labels owned by Macy's.

Jon Bond, VIPStore's head of business development, called the move "a smart way to introduce Macy's biggest selling brand in the US" to the Chinese market.

"It will be the only way to buy the INC brand in China," he said.

Macy's now offers international shipping on Macys.com to customers in China and more than 100 other countries. Orders placed on Omei.com, though, will be shipped to customers through one of VIPStore's three warehouses in China and thus won't be subject to the country's import duties and tariffs.

"Omei.com is in Chinese," said Jim Sluzewski, a Macy's spokesman. "If somebody is uncomfortable with English, they can't buy from Macys.com, which is only available in English."

Bond said no prices have yet been set for the INC products that will be sold through Omei.com, but that those will "broadly reflect their US prices". Omei.com offers at least 40 other brands such as BCBG, Rebecca Minkoff, Guess, Calvin Klein and Italia Independent.

Sluzewski said many Chinese tourists have visited prominent Macy's stores at New York's Herald Square, Union Square in San Francisco and South Coast Plaza in Southern California. The retailer is a household name in China, largely thanks to the Macy's Thanksgiving Day Parade, which is broadcast internationally each November, and the holiday movie Miracle on 34th Street, which was set at the company's Herald Square store.

"This program will be an opportunity for us to learn about our Chinese customers," the spokesman said. "China is a large and growing market. We are in it for the long term."