Columbia Sportswear and Swire Resources will part on friendly terms from their joint venture in China after Columbia stated its intention to acquire the remaining 40 percent in Columbia Sportswear Commercial (Shanghai).
An amicable press release issued by Columbia and Swire states that Swire Resources will continue as the exclusive independent distributor of Columbia Sportswear in Hong Kong and Macau. Columbia says that future plans include continued investments in China, as well as expansion of direct and dealer-operated retail locations.
Swire Resources was Columbia Sportswear's exclusive independent distributor for its products in China from 2004 until January 2014, when the joint venture was founded. Swire Resources, a subsidiary of Swire Pacific, owned 40 percent from the outset and Columbia 60 percent, with profits and losses shared in similar proportions. The initial agreement was for 20 years but included a provision for the sale of the minority interest after the fifth year.
The joint venture operates 86 retail stores across China and also sells through brand-specific e-commerce websites in China. It also has distribution relationships with approximately 50 wholesale dealers who take care of 750 retail stores. Sales in 2017 in China totaled about $168 million, generating an operating margin believed to be in low double digits. Sales are in line to achieve high single-digit growth in 2018, according to Columbia.
Jason Zhu will continue as general manager of Columbia Sportswear Commercial (Shanghai) Company. Columbia says it intends to maintain the existing management team, staff, dealers and distribution networks. The acquisition is expected to be completed by Jan. 1, 2019, subject to regulatory approval in China.
