The exit of Yoox Net-A-Porter (YNAP) from the Chinese market marks a strategic shift, focusing on profitability.
- The decision follows the termination of a strategic partnership with the Alibaba Group.
- The move aims to prioritize investments in more profitable markets, as stated by Richemont.
- Weak demand in China has significantly impacted the luxury market.
- The market exit occurs amidst Richemont’s attempts to sell a majority stake in YNAP.
Yoox Net-A-Porter, part of the Richemont Group, is withdrawing from the Chinese market as part of a strategy to concentrate on more profitable regions. This decision comes in the wake of a termination of the partnership between Richemont and Alibaba Group, originally established to extend YNAP’s reach to Chinese consumers via the Fengmao platform.
Yating Wu, the CEO of Fengmao, made the announcement that the strategic partnership would conclude, and this was confirmed by Richemont. The company articulated that the departure from China allows them to redirect their resources and investments towards geographies that offer better profitability prospects.
The exit is not isolated, as it reflects a broader trend of declining demand in China’s luxury sector. This is evidenced by Kering’s caution about a possible profit reduction of up to 45% within the first half of 2024, primarily due to weakening Chinese sales. Similarly, Burberry has experienced a notable stock decline over the past year, influenced by reduced demand in both China and the U.S.
Richemont’s decision also coincides with its efforts to divest a majority stake in YNAP, following an unsuccessful agreement with Farfetch. A spokesperson for YNAP highlighted that the exit aligns with a global plan to narrow their focus onto their core, more lucrative markets.
The decision to exit China is a strategic realignment by YNAP towards more profitable endeavors.
