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Tag: China

  • Parfois to expand in Asia and other country

    Parfois to expand in Asia and other country

    Portuguese accessories brand Parfois is planning an expansion into Asia and Eastern Europe.

    Parfois, founded in 1994, currently operates 900 stores in 65 countries and is seeking to reach its 1000th by the end of this year. The brand opened in around 10 new markets this year – including joining Alibaba’s Tmall Global platform – and while immediate plans are focusing on building its presence in Latin America, it has already begun to explore options in Asian and Eastern European countries.

    Parfois’ director of marketing and communications Susana Coerver said sales in Portugal and Spain represent more than half of the firm’s revenue, with Spain by far the biggest market, prompting expansion into smaller municipalities within the country. The company also aims to expand its product range with a venture into apparel.

    The brand closed the 2017 financial year with €306 million in sales, with growth expectations for the current year aiming at 20 per cent.

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  • Vietnam to suffer collateral damage in China-US trade war

    Vietnam to suffer collateral damage in China-US trade war

    The first salvo in the latest trade war between the U.S. and China was fired by the former last Friday, when it slapped a 25 percent duty on about $34 billion worth of Chinese goods.

    China retaliated “immediately” with a similar action, the country’s foreign ministry said.

    However, the tariffs that the U.S. has slapped on China will likely see Chinese products “flood into Vietnam,” including textiles, garments and wood products, said Tran Tuan Anh, Minister of Industry and Trade.

    This is not only a trade war but also “a war on power, technology and currency policy between the world’s two largest economies,” Anh said at a recent government meeting.

    Cheaper yuan

    The trade war will have negative impacts on Vietnam’s economy as China will take the opportunity to export in large quantities to Vietnam, according to local economists.

    The Chinese yuan has lost 4.18 percent against the U.S. dollar over the last two weeks, while the Vietnamese dong has only lost a little above one percent, so Chinese goods will be 3 percent cheaper than before when exported to Vietnam. This will increase Chinese exports and gradually take away jobs and manufacturing facilities in Vietnam, they said.

    Another worrying aspect of the situation is that low quality products from China, which are labeled as residual inventory of exports to the U.S., will rush into Vietnam and be bought by Vietnamese consumers, said Robert Tran, CEO of global business advisory firm RBNC.

    Some experts also fear that Vietnam might be one of the next targets of the U.S.

    When the world’s two largest economies slap tariffs on each other, other countries will be affected in trade, said Dr. Pham Sy Thanh of the Chinese Economic Studies department under the Vietnam Institute for Economic and Policy Research.

    “When Vietnamese exports to the U.S. originate from China, the U.S. can also impose the same tariffs on Vietnam,” Thanh said.

    This will be a big challenge for Vietnam as the U.S. is one of Vietnam’s top export markets, he added.

    Industry leaders in Vietnam have also expressed similar concerns. Many Chinese clothes, shoes or bags are entering Vietnam illegally to be exported to the U.S., said Pham Xuan Hong, chairman of HCMC Association of Garment, Textile, Embroidery and Knitting (AGTEK).

    “Local firms should not buy these items for short-term benefits as the reputation of Vietnam’s textile industry will be affected,” Hong said.

    The Vietnamese government should get involved in preventing local firms from importing Chinese products to export to the U.S., he added.

    The bright side

    Beyond the potential threats, Vietnamese business leaders also see great opportunities in the trade war.

    AGTEK chairman Hong noted that Chinese textile is one of the items affected by the U.S. tariffs, so there are chances that foreign investors will transfer orders to Vietnamese firms.

    The animal husbandry sector is also looking at the bright side of the trade war.

    With China saying it will impose an additional 25 percent tariff, on U.S. pork, the total tariff will rise to 71 percent, exclusive of VAT, said Doan Xuan Truc, vice chairman of the Animal Husbandry Association of Vietnam (AHAV).

    “This will definitely be a great opportunity for Vietnam, as China has huge demand for pork,” Truc said, adding that it imports over 2 million tons of pork each year.

    Exports to the U.S. reached $41.6 billion last year, accounting for 20 percent of Vietnam’s total exports, according to Vietnam Customs.

    Meanwhile, it exported $35.4 billion worth of goods to China, a growth of 61.5 percent from 2016.

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  • L Catterton Asia, JD.com Invest In Secoo

    L Catterton Asia, JD.com Invest In Secoo

    LVMH-linked L Catterton Asia and JD have jointly invested US$175 million into Asian luxury fashion platform Secoo, via convertible notes.

    L Catterton and JD together will have the right to appoint a director and an observer to Secoo’s board of directors. But in a broader tie-up, Secoo will have access to L Catterton’s network of luxury leaders and strengthen relationships with leading luxury brands in the L Catterton stable, including Pepe Jeans and eyewear brand Gentle Monster.

    “We are excited about this strategic partnership with L Catterton Asia and JD,” said Richard Li, Secoo’s chairman and CEO. “L Catterton is the leading consumer-focused investment firm in the world, and JD is China’s largest retailer and the leading e-commerce giant in China. By establishing relationships with leading partners in the consumer, luxury goods and e-commerce spaces, Secoo is poised to gain invaluable name recognition and further boost the company’s reputation in the international luxury consumer space.

    Through this partnership, Secoo will be able to leverage L Catterton and JD’s operational expertise and vast resources to expand and deepen our market presence not only in China, but across the globe.”

    Shengli Hu, president of JD fashion & lifestyle, said the partnership will help JD enhance its luxury capabilities and provide the best possible luxury shopping experience to consumers in China.

    “Chinese consumers are increasingly discerning about their luxury purchases, demanding more variety and choice than ever. As we look to continue to meet this demand, we see many potential areas for future collaboration with Secoo.”

    Secoo sells a wide collection of authentic, upscale products and lifestyle services on Secoo.com, mobile applications and offline experience centers, offering more than 300,000 SKUs, covering over 3000 global and domestic brands.

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  • Tmall Fashion, Eurovet to Support Global Lingerie Makers

    Tmall Fashion, Eurovet to Support Global Lingerie Makers

    The fashion unit of Alibaba Group-owned B2C marketplace Tmall and Eurovet, the world’s leading organiser of trade shows for lingerie, swimwear and active brands, are teaming up to help industry players sell into China.

    Tmall and Eurovet signed a memorandum of understanding in Paris on Saturday, pledging to “leverage the respective expertise and international reach to explore innovative ways to collaborate”. The partnership will also work to educate trade-show participants to better understand the unique characteristics and preferences of shoppers in the world’s second-largest consumer market.

    Headquartered in Paris, Eurovet is the largest trade show company in the global undergarment and swimwear industry, with shows in its home city, New York and Las Vegas. It has had a presence in China for 15 years, and two shows are planned, in Shanghai in late September and Hong Kong in March next year.

    “Together, our two companies will explore joint initiatives to accelerate the local and international underwear business and ultimately support companies and brands accessing and thriving in the Chinese market,” said Anita Lu, VP of Tmall Fashion.

    With the expansion of China’s middle class and its growth in purchasing power, analysts say many of the country’s consumers, especially women, are getting choosier about their undergarments. Instead of seeing bras and underwear as just functional pieces, women are buying them to feel both comfortable and sexy. According to Euromonitor, China’s retail undergarment market is likely to reach $33 billion by 2020, an estimated 32 per cent jump from 2017.

    Chinese consumers’ growing love affairs with high-end bras and panties have also stoked global brands such as Victoria’s Secret, La Perla, Maidenform, Wolford, Aubade and Zimmerli to open their own Tmall flagship stores in recent years.

    “At the end of the day, lingerie is more than an outfit. It’s a way to express inner desire,” Lu said. “The younger generations of Chinese women, in particular, are looking to be more independent and free in their choices and lingerie is a good way for them to express themselves but also to take care of their body.”

    The Tmall and Eurovet partnership will also allow trade-show participants to harness Tmall’s insights to better engage with Chinese consumers, streamline the shipping and logistic process, improve supply-chain management and communicate with their local partners, said both companies. This know-how will better empower foreign brands to run a smoother and more efficient operation in China, they said.

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  • Hai Di Lao will open first London store

    Hai Di Lao will open first London store

    Chinese hot pot chain Hai Di Lao will open its first UK restaurant at the Trocadero in Piccadilly Circus, London.

    In a deal facilitated by real estate firm Savills, the brand has signed a 15-year lease of an almost 10,000sqft site. It is the chain’s first venue in Europe and follows the opening of its New York restaurant in Times Square.

    Savills’ leisure team associate director Richard Thomas said “Hai Di Lao is a globally recognised brand with fans of the concept worldwide… the chain already has its sights set on expansion both in the UK and across Europe and we are very pleased to have secured this prime spot for its flagship restaurant.”

    To date, Hai Di Lao has opened 310 locations around the world.

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  • Xiaomi shares fall in Hong Kong trading debut as US-China trade war deter equity investors

    Xiaomi shares fall in Hong Kong trading debut as US-China trade war deter equity investors

    Xiaomi, the first company to raise capital under Hong Kong’s overhauled listing rules for pre-revenue start-ups or companies with multiple classes of stock, sputtered during its trading debut on the city’s exchange when investors spooked by the US-China trade war refrained from buying its shares.

    Shares of the Beijing-based company, offered a week ago at HK$17 each in what was once billed as the world’s biggest initial public offer, fell by as much as 5.9 per cent in an advancing market to HK$16, before recovering to end their first trading day at HK$16.80.

    “Investors are no longer that crazy about so-called new economy IPOs, as many of them have quickly fallen below their offer prices,” said Edmond Hui, chief executive for Bright Smart Securities.

    “It’s no longer a guarantee of making money.”

    The lacklustre debut was a blow for the world’s fourth-largest smartphone maker, which had taken a mere seven years to grow from a start-up to surpass 100 billion yuan (US$15 billion) in sales. Founded by serial entrepreneur Lei Jun in 2010, Xiaomi was the first blockbuster IPO under the new listing rules that Hong Kong’s securities regulator and stock market operator pushed through last year.

    “Xiaomi’s listing signals the Hong Kong market has entered a new phase,” said the city’s Financial Secretary Paul Chan Mo-po, speaking in Cantonese during a ceremony marking Xiaomi’s trading debut. “I believe [Hong Kong’s listing reform] will prompt more innovative technology companies to raise funds in Hong Kong, so our market can better serve the real economy.”

    The size of Xiaomi’s fundraising – originally aimed at US$10 billion – was trimmed by bad timing, coming after the US and Chinese governments fired the first salvoes of their trade war.

    Net proceeds from the IPO were HK$23.98 billion (US$3.1 billion), after deducting underwriting fees and other relevant expenses, Xiaomi said. The company priced its stock at the low end of a price range of between HK$17 and HK$22 each.

    That values the company, whose name is the Chinese phrase for millet, at US$54.3 billion, about half of the US$100 billion it had originally sought, which would’ve made Xiaomi the world’s largest IPO this year. Instead, that honour has gone to Siemens Healthineers, which raised US$5.17 billion in Frankfurt in March.

    “Although the macroeconomic conditions are far from ideal, we believe a great company can still rise to the challenge and distinguish itself,” Xiaomi’s founder and chief executive Lei Jun said in a brief speech at the start of trading. “From day one, innovation has been an integral part of Xiaomi’s DNA,” he said, adding that the listing would be “a brand new start for Xiaomi.”

    It plans to use 30 per cent of the proceeds for research and development, 30 per cent to expand and strengthen its capability into the internet of things business, 30 per cent for global expansion, and the remainder for working capital and other corporate purposes.

    Four of the five biggest tech IPOs in Hong Kong since September are now trading below their offer prices.

    Lei, who founded Xiaomi in 2010 and currently holds nearly one third of the company’s stock, has been presenting Xiaomi as an internet company rather than a hardware maker, saying it should be valued as hybrid of Apple and Tencent because it is “driven by innovation”.

    Companies billed as manufacturers, like tech giant Apple, tend to achieve much lower valuations than those categorised as internet firms, for example China’s Tencent.

    Investors were not the first to question Lei’s categorisation. In mid June, the company shelved a plan to issue Chinese depositary receipts (CDRs) in Shanghai after the market regulator demanded answers to 84 questions, including why Xiaomi positioned itself as an internet firm.

    The smartphone maker has tapped several Hong Kong and Chinese tycoons as investors, including Li Ka-shing of CK Hutchison, Pony Ma Huateng of Tencent and Jack Ma Yun, founder of Alibaba Group Holdings and owner of this newspaper.

    Xiaomi’s seven cornerstone investors have agreed to acquire US$548 million worth of shares with a six-month lock-up period, according to the prospectus.

    US chip maker Qualcomm has committed US$100 million, the only foreign company among the cornerstone investors. China Mobile, the country’s biggest telecom operator, will also invest US$100 million, while CICFH Entertainment, a state-backed industrial fund, will be the biggest cornerstone investor with a US$192 million stake.

  • Allianz Real Estate aims to raise China investment in new economy, logistics

    Allianz Real Estate aims to raise China investment in new economy, logistics

    The property investment arm of German financial services giant Allianz expects China to soon account for up to half of its Asia-Pacific fund allocation, up from the current 40 per cent, with a focus on the new economy and logistics sectors.

    Rushabh Desai, its Asia-Pacific chief executive, revealed on Monday the insurer and asset manager has just bought an office tower in a Beijing software park, already fully leased out to Chinese tech firms.

    It expects to complete another purchase in a Shanghai business park “within a couple of weeks”, he added.

    “We want to be aligned to the new economy and contribute toward China’s growth in the sector; we’re investing based on that thesis,” Desai said. By new economy he refers to non-traditional industries such as biopharmaceuticals and online retail.

    Allianz Real Estate is just one of a number of foreign investment firms betting on growth in the commercial property markets of China’s top-tier cities, driven by high demand from small start-ups to large companies.

    The firm has effectively bought the Beijing office tower – dubbed ZLink and valued at US$185-195 million – outright (98 per cent) in an all-cash deal from private equity firm KaiLong Group and Goldman Sachs, Desai said.

    The ability to pay for such deals without financing and close them in just eight weeks was vital in helping Allianz secure the purchase, Desai said, even though it might not have been the highest bidder as sellers prefer to avoid China’s lengthy financing periods.

    He said the firm is on the hunt for opportunities in Beijing and Shanghai office space, as well as in warehousing. Its portfolio already includes co-investing in two Shanghai office towers.

    Allianz Real Estate has a global portfolio growth target of over €1 billion (US$1.17 billion) by the end of 2018, from around 800 million to 900 million euros at present and is well on track to meeting that, he said.

    The property investment business also manages €56 billion worth of assets around the world, a tenth of which is in Asia-Pacific. Desai said the trade spat between the United States and China has had little impact on his firm’s investment decisions, and that post-deal asset management is more important.

    “We monitor political risk but we keep it out of our investment decisions and try to focus on asset level,” he said.

    “As an asset investor, we look at the quality of asset, their location and management. We look to outperform the market, so even if there’s a trade war or impact, we hope our investments will do better than our competition. That is all we try to do.”

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  • Tesla Buyers in China Are Early Casualties in Trade Wrestle

    Tesla Buyers in China Are Early Casualties in Trade Wrestle

    Tesla buyers in China will be among the first consumers to feel the pinch from the U.S.-China trade dispute.

    Price listings on Tesla’s Chinese website increased by nearly 20% this weekend. It came after the U.S. and China on Friday imposed tit-for-tat tariffs on $34 billion of each other’s goods, which affected U.S.-built cars exported to China including Teslas.

    The Silicon Valley electric-car maker had briefly cut prices by about 6% after the Chinese government reduced its tariffs on imported cars to 15% from 25% on July 1.

    But that cut proved short lived. The measures imposed Friday raised the tariff on Tesla to 40%.

    A basic Model S sedan now costs roughly $128,400, up from $107,300 last week, while a Model X sport-utility vehicle costs $140,100, compared with $117,100.

    A Tesla dealer in Beijing said there were still some cars in stock with lower price tags that were delivered before the new tariffs were imposed, but that inventory was very low.

    Tesla plans to build a plant in Shanghai to serve the local market, but for now it only produces vehicles in the U.S. Last year, it sold about 17,000 cars in China, its second-biggest market globally, generating more than $2 billion in revenue.

    Unlike most auto makers, Tesla sells its cars through company-owned stores instead of franchised dealerships, allowing it to set prices. It has 30 stores in China, according to its website.

    The tariffs the U.S. and China imposed on each other present companies with a dilemma: Risk a loss by absorbing the cost or risk market share by passing it on to consumers. Beijing has been looking for ways to shield its companies and consumers, for example by trying to direct purchases of soybeans to Brazil and other suppliers.

    China’s Commerce Ministry said Monday it would use the added revenue from the increased tariffs to provide relief for affected companies and workers. Also Monday, the executive office of the State Council, China’s cabinet, issued a notice Monday calling for an increase in imports while stabilizing exports to promote more balanced trade.

    Tesla isn’t the only auto maker that builds in the U.S. and ships to China: BMW AG , DaimlerAG and Ford Motor Co. all sell U.S. imports in significant volume here.

    Last week, Ford said it has no current plans to raise retail prices on its China imports in response to the tariff hike. Ford sold roughly 65,000 imported Lincoln vehicles in China last year, as well as nearly 19,000 Fords. Locally produced cars comprised more than 90% of its sales.

    Daimler said it didn’t plan to pass the entire cost of the tariff rise onto its customers.

    Sales of high-end imports such as Tesla’s are unlikely to be hit severely by the price increase, according to analysts, since buyers of luxury cars tend not to be price-conscious.

    But the pain will spread if the trade war continues, a saleswoman at an import-export company based in Shandong province predicted.

    The company imports U.S. auto parts that are subject to the new tariffs, which means higher prices for its Chinese buyers. They are negotiating with American suppliers on how to divide the higher costs, she said, but they will most likely be absorbed by her company, the saleswoman said.

    “In the short term, our vendors are still talking and discussing prices,” she said. “But in the long term, I think it will definitely have an impact on our business.”

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  • RM Williams coming to China

    RM Williams coming to China

    Boot retailer RM Williams will open stores in China later this year, according to a report by the Australian Financial Review.

    The decision to expand into the fast growing consumer market was made by brand-owner L Catterton Asia, with chairman Ravi Thakran telling the AFR he expected at least a 50 per cent lift in earnings and a 40 per cent increase in sales supported by the expansion.

    The Chinese market has been rapidly proving its worth to retailers, with Starbucks China vowing to double its store-countover the next five years and Prada sales slipping in every market barring China, where it saw a modest 4.6 per cent growth.

    A recent report by Azoya Consulting and Frost & Sullivan found that 87 per cent of local brands view the market as a lucrative opportunity – with over 500 million online shoppers in China.

    The study found that Australian retailers are moving to invest in their owns paths to the Chinese market, hoping to sell directly to the consumers rather than through e-commerce platforms.

  • US hits Chinese firm Sinovel with US$1.5m fine for stealing technology

    US hits Chinese firm Sinovel with US$1.5m fine for stealing technology

    A US court on Friday imposed the maximum fine of US$1.5 million (RM6.06 million) of Chinese firm Sinovel for stealing trade secrets from an American company producing wind turbines, the Justice Department said.

    The decision comes on the day Washington unleashed 25% import tariffs on US$34 billion (RM137.36 billion) in Chinese products to punish the country for what President Donald Trump has said is the rampant theft of American technology.

    After being charged in 2013, Sinovel was convicted in January by a US court of stealing the trade secrets of AMSC, a US-based company formerly known as American Superconductor, which lost US$550 million and 700 jobs — more than half its global workforce — as a result, the Justice Department said in a statement.

    The two companies this week reached a settlement and Sinovel has one year to pay US$25 million to AMSC, after paying US$32.5 million this week. The Chinese firm also will repay US$850,000 to other victims.

    “Rather than pay AMSC for more than US$800 million in products and services it had agreed to purchase, Sinovel instead hatched a scheme to brazenly steal AMSC’s proprietary wind turbine technology, causing the loss of almost 700 jobs and more than US$1 billion in shareholder equity at AMSC,” acting Assistant Attorney General John Cronan said in statement.

    “As demonstrated by this prosecution, intellectual property theft poses a serious threat to American companies.”

    Sinovel used the stolen technology, including software, to regulate the flow of power from turbines to electrical grids, to produce its own wind turbines and retrofit existing turbines, prosecutors said.

    The company also hired away an AMSC engineer to help steal source code for the key software in 2011, the statement said.

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  • Australia’s Volley expands in China market

    Australia’s Volley expands in China market

    Australian shoe brand Volley will open 50 stores in China following a surge in online demand.

    The 79-year-old brand became unexpectedly popular after Mandopop diva Faye Wong was photographed wearing then at Hong Kong International Airport. Subsequent orders online crashed the company’s e-commerce platform.

    With the success of a trial pop-up store in Beijing, the brand’s first shop will open in Shanghai later this month.

    Collective brand manager John Szwede said the celebrity focus was a major factor in deciding to open the stores. In a discussion, he said: “Since opening the pop-up store in May, we’ve had our biggest growth month in China ever. The split between online and physical store sales is almost 50-50. It’s remarkable how big the market is.”

    Szwede added that 70 per cent of the brand’s wholesale sales are now going to China.

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  • Secoo and Italia’s Richard Ginori tie up in partnership

    Secoo and Italia’s Richard Ginori tie up in partnership

    Luxury retail platform Secoo has announced a partnership with Italian porcelain manufacturer Richard Ginori exclusively for the Chinese market.

    The heritage brand, founded almost 300 years ago, is one of the region’s most prestigious manufacturers of fine porcelain tableware and artistic porcelain.

    Li Rixue, Secoo’s founder and CEO, said: “The entry of Richard Ginori carried out our business strategy of further tapping into China’s robust luxury consumer market demand. With our consistent focus on both the diversity and quality of the products and services that we offer to our customers, we are confident that we are well positioned to capture emerging opportunities driven by the consumption upgrade in China and unlock values to our customers.”

    The move serves as part of Secoo’s strategy to become a leading premium lifestyle platform and luxury e-commerce site.

    Secoo customers can select from a wide range of porcelains offered online and collect the product from the brand’s offline experience centers in nine major Chinese cities.

  • Walgreens investment in GuoDa is finally happening

    Walgreens investment in GuoDa is finally happening

    Walgreens Boots Alliance has finally achieved regulatory approvals for its Chinese pharmacy acquisition – more than six months after announcing the deal.

    The US-headquartered drugstore giant has bought a 40 per cent stake in Sinopharm Holding GuoDa Drugstores Co, better known as simply GuoDa, which it describes as a leading retail pharmacy chain in China. It will invest about US$416 million in capital to acquire the stake.

    “We believe GuoDa holds a strong position in the sector, and as a global pharmacy-led health and beauty enterprise, we are well positioned to support its further growth ambition,” said Walgreen Boots executive vice chairman and CEO Stefano Pessina.

    “We are delighted that we have received regulatory approvals and our investment agreement has now been completed.”

    Walgreen Boots believes it can build the GuoDa business by sharing its international best practices and pharmacy expertise.

    “We believe there is great potential in working together to play a transforming role in the evolving Chinese retail pharmacy market.”

    Founded in 2004 and headquartered in Shanghai, GuoDa operates more than 3800 retail pharmacies across around 70 cities, and employs close to 20,000 people.

    Both Walgreen Boots and GuoDa believe recent healthcare reform undertaken by the Chinese government present “unprecedented opportunities” to expand the business nationwide.

    Last December, at the time he announced the planned investment, Pessina said after a 10-year presence of Walgreen Boots in China, it was an exciting opportunity to invest in the nation’s retail pharmacy sector.

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  • Louis Vuitton is lowering its retail prices in China

    Louis Vuitton is lowering its retail prices in China

    LMVH maison Louis Vuitton is lowering its retail prices in China. In a statement issued by the maison to the newspaper Jing Daily, the brand announced that it had decided to “lower prices on a wide range of products to support the government’s efforts to reduce the cost of luxury goods sold in China”.

    The Ministry of Finance in Beijing, starting from the first of July, has lowered taxes on imports for an average of 20.7 percent, with a view to favoring purchases in the country. In 2011, luxury goods sold outside of China were about 68 percent cheaper than those same products sold in China; thanks to the measures adopted over time, in 2017 the difference decreased to 16 percent.

    The new prices of Louis Vuitton would have already been updated on the Chinese e-commerce of the brand and in stores. The estimate is that of a cut between 300 yuan (about 40 euros) and 1,500 yuan (just under 200 euros) on different products; the average price reduction, according to the headline, would therefore be between 3 and 5 percent.

    It is still unclear whether other luxury fashion houses will follow the same strategy as Louis Vuitton, but a chain effect is expected. For example, since 2015, Chanel has adopted a “harmonized” pricing policy, with the aim of reducing the price gap in China and abroad, and thus encouraging purchases in the country.

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  • Walgreens to invest $416 million in Chinese pharmacy chain

    Walgreens to invest $416 million in Chinese pharmacy chain

    Walgreens, the biggest U.S. drugstore chain, said it will buy the minority stake from China National Accord Medicines Corp. for about $416 million.

    The Deerfield-based company said it will expand its global retail pharmacy operations by taking a 40 percent stake in Sinopharm Holding Guoda Drugstores Co. Ltd., a subsidiary of Chinae National Accord Medicines Corp.

    Sinopharm GuoDa “operates and franchises retail pharmacies across China,” a market that Walgreens CEO Stefano Pessina has said he wants to tap as the companies looks to faster growing and emerging markets to extend its reach.

    “It is China’s leading pharmacy chain,” Walgreens Pessina said in a statement.

    The deal comes when the Chinese government has been encouraging private investments and equity from abroad in its health care industry.

    Healthcare expenditure in China is expected to reach $1.1 trillion by 2020, according to the U.S. Department of Commerce.

    GuoDa, which operates and franchises 3,800 retail pharmacies across 70 cities in China, said the Walgreens investment would help its nationwide expansion plans. The company employs close to 20,000 people.

    “We are delighted that we have received regulatory approvals and our investment agreement has now been completed,” Pessina said. “We believe GuoDa holds a strong position in the sector, and as a global pharmacy-led health and beauty enterprise, we are well positioned to support its further growth ambition. We are looking forward to sharing our international best practices and pharmacy expertise. We believe there is great potential in working together to play a transforming role in the evolving Chinese retail pharmacy market.”

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