G-III Will Enter The Chinese Market.

Last December, clothing manufacturers and distributors in the United States

After buying NASDAQ:GIII Donna Karan International (DKI) for $650 million, G-III is eyeing China.

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According to the world clothing and shoe net, G-III group has established partnership with Fred Gehring's investment fund Amlon Capital BV, and established a joint venture to carry out DKNY and Donna Karan in China, including Hong Kong, Macao and Taiwan.

The production and sale of clothing and accessories for men and women.

G-III will have a 49% stake in the joint venture and the remaining shares will be held by Amlon Capital BV.

The joint venture started with 25 million US dollars to strengthen the business growth of DKNY and Donna Karan brand in China.

China's DKNY and Donna Karan products will be made up of G-III group's distribution products and joint venture's specially designed products.

The joint venture will become the sole distributor in China since January 1, 2018.

The joint venture has replaced the previous distribution agreement in China, and the company will make profits through the authorized fees of Direct stores and distributors.

Tommy Hilfiger former chairman and CEO and former PVH vice chairman Fred Gehring as the chairman of the joint venture company, Tommy Hilfiger China's former CEO Steve Shen is the chief executive officer of the joint venture company.

Fred Gehringcencen has played an important role in the pformation of Tommy Hilfiger.

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In 2016, he founded Amlon with Tommy Hilfiger partners and private Holdings Company Apax Partners. Its main business is to invest in clothing and accessories brands, holding shares in Karl Lagerfeld, Denham Jeans and children's wear brand Vingino.

It is worth noting that Donna Karan has a relatively long history in the Chinese market. She is the first American designer to set up shop in China.

In 1993, Donna Karan first opened shop in Shenzhen, and also sold in Hongkong Joyce boutique.

In early 90s, DKNY and Christina Ong reached an agreement to open DKNY stores in Hongkong. Later, Donna Karan and ImagineX reached a DKNY distribution agreement in China and Southeast Asia.

The women's Wear Daily quoted the A.T.Kearney s international retail development index as saying that China is one of the most attractive retail investment markets after India.

Even though China's macroeconomic growth slowed to 6.7% in 2016, the retail industry still recorded an increase of 10.4%.

The main findings of the report show that Asia is an important driving force for the expansion of global retailing and apparel, luxury goods and consumer goods.

At the same time, the first batch of products after G-III's acquisition of DKNY will be on shelves in September.

In December last year, G-III group, which had a market capitalization of less than $2 billion, bought DKI of DKNY parent company from LVMH group for $650 million.

After the completion of the acquisition, Morris Goldfarb tried to persuade the brand founder Donna Karan to return, but failed.

Because DKNY's designer Dao-Yi Chow and Maxwell Osborne also insist on leaving after the acquisition of the brand. Currently, the G-III group's internal design team is responsible for the design of DKNY and Donna Karan two brands. The team will re evaluate the brand and the brand position on the basis of keeping the Donna Karan designer's characteristics as much as possible.

In March this year, G-III group sold Donna Karan and DKNY's women's clothing licensing agency to Messi general store, and signed a licensing agreement with the CK parent PVH group in the US and Canada.

Robert Burke, chief executive officer of Robert Burke Associates, believes that G-III group is right with PVH group because DKNY has many synergies with CK and Tommy CK of PVH group, so that the group can also focus on producing products.

Robert Burke also believes that the exclusive licensing agreement signed between G-III group and Messi department store will help Messi to compete with Amazon and other e-commerce giants.

However, Neil Saunders, managing director of GlobalData Retail research company, is not optimistic about the agreement. He said the exclusive agreement greatly restricted the exposure rate of DKNY women's clothing in the market, which is not necessarily a good thing in the long run.

DKNY franchise partners of other categories will remain unchanged. At present, the brand perfume business is represented by Estee Lauder group, the watch business belongs to the Fossil group, the glasses business is owned by Lu Xun Tai card group, the underwear products are responsible for the Hanes group, and these products of DKNY can also be sold in Messi department store.

According to the financial report, in the past few months, G-III group has closed 69 stores with poor performance, and this year will close 45 to further reduce operating costs. It is estimated that sales in the second quarter will be about 520 million dollars, and the pitional expenses for DKNY and Donna Karan brands will cost about $3 million, with a net loss of about 15 million to 20 million dollars. The group said it will soon get the performance return from DKNY and Donna Karan in the second half of the year.

Morris Goldfarb had previously predicted that after adjusting the products of DKNY, sales will reach US $1 billion in the next three to four years, while the sales of Donna Karan will reach US $500 million in five years.

After the release of the earnings report, G-III group's share price surged 18% to $23.6 per share, and its current market value is about $1 billion 134 million.

G-III group, founded in 1956 by Polish Aron Goldfarb, is mainly engaged in the wholesale and retail business of clothing. Its own brands include Vilebrequin, G.H.Bass, Andrew Marc, Marc New York, Eliza Eliza and Goldfarb. At the same time, it has some business management rights including more than 40 brands, namely, ",", ",", ",", "and".

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