Alibaba and Richemont Invest in Farfetch

Alibaba and Richemont have both invested $300 million USD into the British-Portuguse online retail company. 

Photo Credit: Bloomberg

The three prolific companies have confirmed that they are entering a partnership with Alibaba and Richemont investing $300 million each into Farfetch. Farfetch will establish an online store on Alibaba’s sites with the introduction of Tmall’s Luxury Pavilion and Luxury Soho. This investment has resulted in a combined stakehold of 25%. 

Richemont who owns another luxury e-commerce store, Net-a-Porter, will see an alliance of the two major online stores against rival companies such as LVMH and Kering. This is a revolutionary move for Farfetch and Richemont as it allows them to proliferate in the lucrative Chinese market. 

The Chinese government has strict regulations in the operation of international businesses in China. They are required to establish a representative legal entity in China and many high-profile companies can step around these regulations by striking a deal with an already existing Chinese company. This is especially important during the Covid-19 pandemic as the Chinese market has shown a great recovery. Prada has released their sales increased by 66% in China in July reports. As Farfetch and Richemont carry both independent and luxury brands, this joint venture is beneficial for all as they offer more products to the interested consumers.

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