Money Matters - Simplified

Macy’s Inc. enters in Chinese E market

Macy’s Inc. is entering Chinese E commerce market. Domestic market will be now facing the challenges.

The Wall Street Journal reports shows, Macy’s Inc. has invested $15 million in Chinese online retail company “VIPStore Co”. Intel Corp.’s “Intel Capital” an investor in the company deal will allow Macy’s to sell merchandise through a dedicated section on the website, Omei.com, in spring 2013, a luxury site operated by VIPStore.

Macy’s move comes after Neiman Marcus Group Inc. invested $28 million for a stake in Chinese site Glamour Sales Holdings Ltd. It allows the company to tap Chinese demand for luxury goods without having to invest in bricks and mortar stores. J. Crew Group Inc. also said earlier this year it would start shipping overseas to 107 countries and is actively looking for retail space in Asia and Europe.

Increased competition coming from U.S. and European companies is putting pressure on many domestic startups that had entered China’s web to sell luxury before Macy’s, Neiman and Net-a-Porter were brave enough to peddle their wares in unchartered Internet territory.

Chinese Internet portal “NetEase” closed its once-popular luxury commerce site “NetEase Premier” in January, having operated for less than a year. Analysts view, “more will shutter their sites as companies like Macy’s pile in, as Chinese consumers are interested in big global brand names over little-known domestic offerings”.

"The battle online also reflects what’s happening in the cyber sphere. As larger, global fashion companies are coming into China, the smaller Chinese boutiques that once dominated lower-tier cities are facing challenges to keep their doors open. Chinese consumers want what the rest of the world has access to,"said Aaron Fischer, an analyst at brokerage CLSA Asia Pacific Markets.

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