Toys 'R' Us and Li & Fung Retailing have established a joint venture for the Toys 'R' Us business in Southeast Asia and Greater China.
Existing Toys 'R' Us licensed operations throughout Asia, which includes more than 100 stores and offices across nine markets, will become 70 percent owned by Toys 'R' Us and 30 percent owned by Li & Fung Retailing. Toys 'R' Us will control the stores and will have the opportunity to acquire the remaining share of the business in the future.
The joint venture includes 90 existing Toys 'R' Us stores in Brunei, China, Hong Kong, Malaysia, Singapore, Taiwan and Thailand. These stores will be considered wholly owned operations of TRU. The remaining 14 stores in the Philippines and Macau will continue to be operated under a license agreement.
The deal increases the number of TRU’s wholly owned international locations by 17 percent, gaining more than 350 employees. The joint venture will include ownership and oversight of office operations in seven markets, including the regional TRU headquarters in Hong Kong. An existing network of eight distribution centers in Asia will be used to stock Toys 'R' Us stores.
“Li & Fung has been a terrific partner in establishing and growing the Toys 'R' Us brand in Asia, and we are pleased to continue our work with them as we enter this exciting next phase of our business development there," says Jerry Storch, chairman and chief executive officer, Toys 'R' Us. "We believe there is significant growth opportunity for our company in this region, and we look forward to an aggressive expansion of our business in both existing and new Asian markets, including Northern China. International growth remains a key part of our long-term business strategy, and we are proud to celebrate this important milestone for our company.”
"Over the past 25 years we have opened over 100 Toys 'R' Us stores across Asia," says Dr. Victor K. Fung, chairman of the Li & Fung Group. "This successful business has benefited from high brand awareness and the recruitment of nearly three million members in our Star Card loyalty program in the markets we operate. We are pleased to return to the joint venture arrangement with Toys 'R' Us in anticipation of a new phase of business growth. The new agreement will enable us to expand into new geographies such as Northern China, which will help us leverage even further growth in the region.”