Asos has made the decision to remove its Chinese operations as the retailer found expansion of the business too costly.
Instead of holding stock in China, Asos will serve it Chinese customers through its global platform and ship clothes from Europe. Asos will also be discontinuing its Mandarin website. Chief Executive Nick Beighton noted that the closure of the Chinese website would “remove the drag on earnings and a £60m to £70m operating loss”.
Due to complex restrictions on clothing commerce in China, the fashion etailer has found it is easier to ship to China from the UK. Certain difficulties Asos has encountered within China are regulations on clothing labels and cultural issues such as selling one seasonal range in a country with diverse climates throughout.
As well as these, Asos struggled to attract Chinese consumers away from etail behemoth Alibaba which dominates 75% of the ecommerce market.
The CEO stated that the company’s decision to pull the plug on Asos.cn was part of its strategy to concentrate on less regions.
“Getting eyeballs on our product has proven more difficult than we thought. There are always challenges as a start-up in a country, but there are additional challenges to being a start-up in China,” Beighton said.
“We are simply serving our growing customer base there in a more efficient, less costly manner”.