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ZURICH – Compagnie Financière Richemont SA, of Cartier, and Alibaba Group Holding Ltd. They are partnering to launch an e-commerce business in China, the latest initiative taken by a luxury company to reach the largest customer base in the industry.
As part of the partnership announced Friday, the two companies will develop two applications for online stores Net-a-Porter and Mr. Porter of the Swiss group for Chinese consumers. They will also open stores on the Tiball Luxury Pavilion platform of Alibaba.
This deal is the latest sign of how the luxury industry is adopting online sales, partly driven by the desire to reach young buyers. This is particularly the case in China, where consumers account for about a third of global luxury sales.
Teaming up with Alibaba will allow Richemont to better reach these consumers, while offering the Chinese company a wider choice of brands.
"Our digital offering in China is in its infancy and we are confident that this partnership with Alibaba will enable us to become a significant and sustainable online player in this market," said Richemont President Johann Rupert.
Richemont also owns brands such as Vacheron Constantin, Piaget and Montblanc, while its Yoox Net-a-Porter SpA unit operates websites, including Yoox.com and Mrporter.com, which sell various luxury brands.
Alibaba launched a luxury platform last year, while its rival JD.com has also grown in the sector, including investing in the Farfetch-based e-commerce platform, listed in the US earlier this year.
For their joint venture, the companies said that Alibaba would provide a technological infrastructure, while YNAP was bringing its relationships with more than 950 luxury brands.
"With Chinese consumers being by far the largest, we see this as a very positive step and will strengthen YNAP's position as a global leader in the sale of luxury goods online," said Vontobel Research analysts.
Richemont shares rose 1% in the afternoon in Zurich.
The luxury watch market has struggled in recent years, in part because of weak demand in China, where the fight against corruption has weakened spending on expensive items. Changes to visa requirements for Chinese tourists entering Hong Kong have also reduced tourism spending.
However, sales of Swiss watches have picked up over the past year. Exports rose 7.5% in the first nine months of 2018 compared to the same period in 2017, according to the Federation of the Swiss Watch Industry. In September, exports to China increased 17% over the previous year.
During a teleconference with reporters on Friday, Mr. Rupert said he did not think that this deal would have the effect of tipping luxury watches and jewelry onto the market.
"We would never take the risk of getting into a situation where we feel that" counterfeiting is likely, "he said.
Write to Brian Blackstone at [email protected]
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