Termination of Yoox Net-a-Porter’s Chinese joint venture with Alibaba

LONDON — Fengmao, the Chinese joint venture between Alibaba and Yoox Net-a-porter, will soon be dissolved, Fengmao CEO Yating Wu announced during a meeting with employees on Thursday, WWD has learned.

YNAP declined to comment.

It is understood that the dissolution of the China joint venture is part of YNAP’s broader plan to exit China in order to concentrate investment and resources on core and more profitable geographical areas.

There may be another reason for dissolving the company. As we reported, Compagnie Financière Richemont hopes to sell YNAP this year and may look to clean up the company and end any long-term partnerships.

Richemont already classified YNAP as a discontinued operation and said on an earnings call last month that it was making progress on the sale.

“Very many parties are still in talks and private equity is not done yet” with the YNAP discussions, said Richemont chairman Johann Rupert. Burkhart Grund, Richemont’s chief financial officer, added: “We hope to report more progress later in the year.”

Richemont also revealed that sales at YNAP were down 14 percent in fiscal 2024 “in a challenging environment for luxury e-commerce.”

Net-a-porter entered the Chinese market in 2013 and established operations in mainland China, and in 2015, industry veteran Claire Chung was appointed as CEO. In the same year, Net-a-porter’s off-season sister business exited the Chinese market. market due to strong competition.

In 2018, in a bid to capture a larger share of China’s luxury e-commerce market, Richemont signed a strategic partnership with Alibaba Group to bring YNAP’s retail offerings to Chinese consumers through Fengmao.

A year later, Net-a-porter opened its flagship store in the luxurious Tmall pavilion, offering a wide selection of over 130 luxury and designer brands such as Brunello Cucinelli, The Row, Balmain, Isabel Marant, Jimmy Choo and Tom Ford. That same year, Yoox closed its website in China.

The joint venture came at a time when Alibaba was looking to gain credibility in the fashion industry and acquire major luxury players such as LVMH Moët Hennessy Louis Vuitton and Kering. It also wanted to eliminate its main rival, JD.com, which was then supporting Farfetch in its bid to dominate the luxury space.

The partnership with YNAP helped Alibaba fill search results with legitimate luxury products and encourage brands to sign direct deals with the platform.

In 2020, Richemont and Alibaba took their relationship to the next level by partnering with Farfetch in a landmark deal aimed at giving Farfetch “better access to the China market” and accelerating the digitalization of the global luxury industry.

However, China’s digital shopping boom came to an end in 2021 when local authorities began cracking down on the tech sector. Two years later, Farfetch went bankrupt and was sold to South Korean company Coupang for $500 million.

At the same time, Alibaba is struggling to maintain high levels of growth post-pandemic. It now faces stiff competition from physical luxury stores in China, which have undergone significant modernization over the past five years.

Nowadays, Chinese fashion consumers can enjoy luxury shopping in many ways. They no longer have to rely on Tmall.

For example, the popular social commerce platform Xiaohongshu has become Louis Vuitton’s preferred partner in China.

The experiential livestream of the Vuitton Fall 2024 collection presented in Shanghai attracted over 470,000 unique visitors, setting a record for luxury livestreams in Xiaohongshu.

At the same time, JD.com began offering omnichannel solutions to luxury brand partners in 2020 and attracted a slew of high-profile brands to sell on the platform, extending Alibaba’s dominance in luxury e-commerce in China to a tee.