Columbia Sportswear to acquire rest of Chinese joint venture
Portland, Oregon-based outdoor and sportswear group Columbia Sportswear Company announced on Tuesday that it plans to buy the remaining 40% of its Chinese joint venture, Columbia Sportswear Commercial (Shanghai) Company, set up with Swire Resources Limited, a subsidiary of Swire Pacific Limited, in 2014.
Following the acquisition, Columbia plans to continue investing in the brand’s development in China, while also expanding its distribution network through both direct channels and dealer-operated retailers.
The company will maintain the joint venture’s current staff and management team, with Jason Shu continuing in his role as general manager.
Columbia President and CEO Tim Boyle thanked Swire in a release, stating, “We are very pleased with the performance of our joint venture since 2014. We have positioned the Columbia brand for long-term sustained growth in the crucial Chinese market.”
“The acquisition is consistent with our strategy to accelerate investment as a brand-led, consumer-first business in the areas of highest growth potential for our existing brands”, he went on to explain.
The joint venture was set up in Shanghai, in January 2014 with an initial term of 20 years. However, provision was made for the purchase or sale of Swire’s minority interest at any point after the fifth year. Columbia currently owns 60% of the operation and Swire 40%, profits and losses being shared along these lines.
“The strategic partnership between Columbia Sportswear and Swire Resources in greater China has been a proven success over many years,” commented Richard Sell, director of the trading and industrial division of Swire Pacific Limited, “As the mainland China business embarks on its next phase of growth, we wish Columbia every success.”
In 2017, the joint venture achieved $168 million in sales and, according to Columbia, these figures are on track to see high single-digit growth in 2018. In line with the company’s 60% ownership stake, the joint venture has been fully consolidated in Columbia’s operating results since the first quarter of 2014.
Columbia Sportswear Commercial (Shanghai) Company currently operates 86 locations in China and also sells its products through brand-specific websites, as well as some 50 wholesalers operating around 750 locations between them. After the acquisition, Swire Resources will continue to be Columbia Sportswear’s exclusive independent distributer in Hong Kong and Macau.
The acquisition is expected to complete around January 1, 2019, but is subject to a number of conditions, including Chinese regulatory approval.
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