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Asos discontinues operations in China

Asos is closing down its Chinese operations, which includes a local office, website and distribution centre, after sales in the country failed to gain momentum.

The e-tailer has estimated that the move will result in costs of up to £10 million, following on from losses of £5.2 million last year and £8.6 million in 2014, as the business invested in establishing a presence in the new territory. Last year saw Asos make a number of investments in the local website, including the launch of local apps for Chinese customers alongside UK-based technology company Red Ant.

Talking last October, as part of Asos's full-year results announcement, CEO Nick Beighton suggested the company's overseas focus would be on France and Germany, while in March this year he revealed that the business is searching for a suitable distribution hub in mid-west US as part of plans to ramp up its presence in the Americas.

Beighton said last year that the operation in China was effectively in start-up mode, but there was no indication that the retailer was set to retract from the market.

"We're planting seeds for future growth, so China will be getting an awful lot of attention too, but it's still very early doors in our China investment," he remarked at the time.

Asos is still open to Chinese shoppers, via Asos.com, and senior management argued this week that despite no longer having a localised presence the move increases the available products for China-based consumers from 6,000 to 80,000.

This week's statement from Asos highlighted the change of strategy, with Beighton – who has now been in the Asos hot-seat for seven months having taken over from founder Nick Robertson in September – saying: "We'll continue to do business in China. We are simply serving our growing customer base there in a more efficient, less costly manner."

Alibaba Group dominates the retail market in China, and in a filing with the Securities and Exchange Commission this week the eCommerce behemoth announced it has "become the largest retail economy in the world". Its financial year ended on 31 March and the business is yet to unveil full figures, but the company's claim suggests the e-tailer has surpassed Walmart as the world's most dominant retail player.

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