Gap is selling its business in China and Taiwan to eCommerce solution provider Baozun for $40 million after 12 years of struggling to establish its presence in the region.
The company has entered into a franchise agreement that will allow Baozun to operate Gap’s website and physical stores in the Greater China region. The deal is expected to close in the first half of 2023, subject to regulatory approval.
The sale is part of the retailer’s strategic review of its global businesses, which was kickstarted two years ago, The Wall Street Journal reported.
“We are deeply committed to our customers in Greater China and know that it is a market with enormous potential for our brand,” said Mark Breitbard, president and CEO of Gap Brand, in a statement. “The growth that we are unlocking through local partnerships with market experts like Baozun is allowing us to not only connect with new and existing customers but to provide them with personalized, service-oriented experiences.”
Gap launched its business in China in 2010 with four stores in Beijing and Shanghai. Over the years, it expanded its physical footprint across China and Taiwan, with its total counting reaching 100 stores at its peak.
While China has long been a lucrative market, it has become increasingly challenging for retailers like Gap to operate in the country. In 2018, the company reportedly faced backlash for selling T-shirts showing China’s map without Taiwan, an island country China claims as its own, and semiautonomous regions of Tibet and Xinjiang. More recently, the strict COVID-19 related lockdowns in the country have negatively impacted foot traffic, resulting in losses for retailers with big physical footprints.