Louis Vuitton is one of the best-selling luxury brands in China. (File photo/CNS)
Synnex Technology International, the largest IT product distributor in the Asia-Pacific region, will work with Shanghai's State-owned Asset Supervision and Administration Commission to jointly build a bonded warehouse hub for luxury goods.
Synnex's China operations have been mostly focused on the distribution of hi-tech products, including Nokia mobile phones. However, with Nokia China's market share quickly evaporating, Synnex's mobile phone distribution business has suffered a decline this year. With its eye now on fashion, this marks the company's first departure from IT distribution.
The company's extensive distribution network is most likely what caught the eye of LVMH Group, a French multinational luxury goods conglomerate which includes major brands like Dior and LV. In their agreement between Synnex and SASAC, their luxury products will be put on sale at various sales outlets around Shanghai with the help of Synnex's distribution centers stemming from the new Shanghai hub.
Hai Zhongtian, CIO for Synnex's China operations, said the monthly turnover for the company's warehouse unit was about 300 million yuan (US$48.15 million) and was expected to reach 7 billion yuan (US$1.12 billion) to 8 billion yuan (US$1.28 billion) or even 15 billion yuan (US$2.41 billion) after operations are expanded at its Shanghai headquarters and the automation of its warehouse storage system begins by the end of 2013.
A senior executive at the company's Shanghai headquarters said that about 4,000 square meters at the hub's automotive warehouse center will be used to build the bonded warehouse.
Synnex operates in 181 cities in 31 countries and regions. Its 2011 business turnover reached US$27 billion and it has five listed companies.