Cotton On Seeks Chinese Partner to Challenge Zara, H&M Dominance

Cotton On Group, a clothing chain with 1,300 stores globally, said it will invest in China to step up its overseas expansion and challenge the dominance of Fast Retailing Co.’s Uniqlo and Hennes & Mauritz AB. (HMB)

The Australian casual-wear retailer is seeking a partner to help with language and regulatory barriers as it plans to set up new stores in the world’s second-biggest economy, Chief Financial Officer Michael Hardwick said in an interview in Singapore where it opened its Asian headquarters last week. The company has more than 160 stores in the region, including Hong Kong, Singapore and Malaysia.

Cotton On, along with apparel companies such as Fast Retailing and Inditex SA (ITX)’s Zara, are expanding in China as rising incomes boost buying power. The North Geelong, Victoria-based retailer, which also owns brands including Rubi Shoes, Supré and Typo, is opening more than 100 stores in Asian markets including South Korea, Japan and Vietnam to cut its reliance on Australia, which made up 55 percent of sales last year.

“We’ve obviously followed a few of the largest fast-fashion retailers up there, which is Uniqlo, Zara and H&M,” Hardwick said in an interview on Feb. 28. “At some stage over the coming years, we’d like to start to replicate that up in the China market as well.”

Cotton On expects its Asian operations to contribute 20 percent to total sales this year, an increase from 15 percent the year before, Hardwick said.

To contact the reporter on this story: Jasmine Ng in Singapore at jng299@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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