The Gap Pushes Its Way Into China, After Closing Shops At Home

Not satisfied with what they've found at home, a classic American brand is looking overseas to feed its need for sales.

The Gap is planning on opening 30 more stores in China next year, Jeff Kirwan, the company’s chief operating officer in China, said at an American Chamber of Commerce event in Shanghai on Wednesday, Business China reports. And the classic American clothier may be favoring expansion overseas over doing business in the states; the company announced in October that it would close 21 percent, or 189, of its U.S. stores, which are suffering from declining sales.

The Gap opened its first Chinese store in November 2010. The chain says it will have 35 stores in China by the end of 2012.

The purveyor of jeans and cardigans may be heading to China to take advantage of the country's growth. China’s economy is fast outpacing that of the U.S., growing 8.9 percent in the last three months of 2011, compared to 2.8 growth percent in the U.S. over that same period. While this was a slowdown from past years, China is still booming. Retail sales were strong at the end of the year, growing 17.1 percent in November and 18.1 percent in December.

In the U.S., the Gap has struggled not only with a weak recovery that has left many out to dry, but also with staying relevant amid a competitive environment in which newer and trendier stores like Uniqlo and H&M are bringing style from overseas to the states. The company also parted ways with its head designer, Patrick Robinson, in May 2011.

But in China and Europe, classic American style still has novel appeal. “For over 40 years, Gap has provided American style [and] celebrated creativity,” said Stephen Sunnucks, president of Gap Inc. International in November 2011 when the company opened its Hong Kong flagship. “We see these same values resonating as strongly with customers and employees in China as they do in our established markets.”

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Comments

[lewmanbubba]

11:58 AM on 02/16/2012

So your not an american anything anymore can you say Ho Chi Min good luck

[Kai-HK]

10:26 PM on 02/15/2012

Excellent! Good to see China providing profit to a classic American company. Keep it up.

[Rush Libraughl 83]

10:01 PM on 02/15/2012

Capitalism is about going where the most profits can be made not about doing what's right or traditional.

These kinds of results should be expected as consumerism changes into something a little more thrifty in the United States and blossoms in China.

[Bob Metcalfe]

09:35 PM on 02/15/2012

Maybe you could outsource your wars to China too? Now that'd be a positive.

[escapement]

07:19 PM on 02/15/2012

"said at an American Chamber of Commerce event in Shanghai"

Am I the only one who sees a problem with this phrase??

[rottnkid]

06:50 PM on 02/15/2012

Ahhh..Now I know where the small tight jeans influence came from.

[TrutherUSA]

06:30 PM on 02/15/2012

If they prefer China then I say let them close all the Gap stores and become a Chinese company.

[frankieshoes1]

05:41 PM on 02/15/2012

"an American Chamber of Commerce event in Shanghai"

That says about all I need to know.

[xiaogermaine8]

04:28 PM on 02/15/2012

If the USA produced its own oil reserves, it would not only create jobs but could sell to the EU to replace the Arab nations. This is too difficult for this administra­tion to understand­. The USA and the EU are both in for a huge jump in Oil as soon as inflation hits. The feds have kept the interest rates to zero know inflation is what is going to be the real killer of America after so much wasted money on stimulus programs that have created no revenue for the government to continue to grow as it is doing under Obama

[Veri]

05:01 PM on 02/15/2012

The Fed keeps the interest rates near zero. To do otherwise would leave the American government paying too much interest on ever increasing debt. Interest expense for the United States for FY2012 (beginning in October) are stated, by the Treasury, to be (for the first four months) $170 BILLION dollars. Multiply by four and you have a general idea of how much taxpayer funds are being used to service America's debt.

On another note, if the government eliminates the debt, no US dollar would be in existance. The US money supply exists because it was created through debt - debt issued by a private Federal Reserve, owned by the banks.

Finally, Russia and China have been dumping Treasuries for over the last year. China is no longer a net buyer of US Treasuries. And half of all US debt is held by Americans - who stand to lose money on their investments in the current finance-dominated US Government.

[tteknulpkram]

05:41 PM on 02/15/2012

Not sure what country you are living in. Have you been to North Dakota lately? We are producing more than half of our oil needs. Most of the rest comes from Canada and Mexico. The wasted money is the tax cuts on the people outsourcing jobs that have been going on for 10 years. Mind you republicans wouldn't allow us to cut subsidies for companies moving overseas. I think it is because they love america so much they don't want any industry here. Maybe you understand it better?

[Dave F]

04:14 PM on 02/15/2012

So... an American company that didn't make their products in the U.S. anyway is expanding overseas which will bring profits back home from overseas customers, re-shoring some profits to America?

Ummm... okay.

[Christopher Hull]

03:54 PM on 02/15/2012

They make everything there so let them sell their ugly clothes there.
In fact, let's do what Brazil does. Any BRAND that wants to import clothes (Calvin Kline, etc) has to pay anywhere from a forty percent on up tarriff UNLESS they also make a certain percentage of their products in the Mercsur area. We should do the same.

[MrStat1]

05:52 PM on 02/15/2012

You know nothing of international trade agreements or practices. You want a trade war. See what happens then.

[Christopher Hull]

06:30 PM on 02/15/2012

And you must know nothing of history or economics. What happens when a country doesn't produce goods? War. I would much prefer a trade war (that we and the EU and the Mercosur would win) than a planes in the air war.
Since you are such a fan of international trade agreements then you should be arguing that the problem is that they are completely uneforced. China has labor laws similar to ours, environmental laws that are, in some cases, stronger than ours. But they do not enforce them. Which allows them to flood markets. There is already a trade war and we are losing. Duh.

[IconicIronic]

03:40 PM on 02/15/2012

They don't really manufacture in the USA anyway. They don't pay Americans to manufacture the clothes but they certainly expect them to buy their overpriced clothing. They can take their business to China and I will buy clothes that are made by Americans sold in America. That way somebody that believes in contributing to the American economy in a meaningful and sustainable way can have my money. Even if it costs more.

[lightbulb10]

04:02 PM on 02/15/2012

I'm happy for Gap making this move. And good point (Nordstrom's can often carry manufacturers committed to American production; not generally so expensive, either.)

It does seem Banana Republic and Old Navy hit 2 main appeals for Americans... and the Gap brand has struggled in America for a # of years.

BUT I noticed emergence of a UNIQLO brand... store openings in America followed by some closures. Seems to be an Asian offshoot in the Gap tradition; very much Gap I grew up with.

[OKBLUESKY]

02:12 PM on 02/15/2012

It is really a non-issue. GAP's poor quality and service is well know.

Moving this business plan to China won't solve GAP's problems.

This is the stylewise U.S. If you can't make it here you can't make it anywhere.....

[fortressfountain]

02:04 PM on 02/15/2012

Hum, I guess Americans do not like well made clothing and instead opt for the cheaper, fall apart brands.
I can recall when I was in high school-people wore t-shirts and shorts in 30 degree weather just to be with the in crowd.

[woody7]

02:08 PM on 02/15/2012

They still do.

[VictoryBlue]

02:56 PM on 02/15/2012

GAP clothes are not well-made.

[TheAnitQuasar]

01:58 PM on 02/15/2012

This will never work. If you close your stores in America and only sell in China, then you become a Chinese brand by default. The Chinese are all about staying hip based on American trends. If Americans aren't buying GAP, then the Chinese will follow suit.

[eric14]

02:56 PM on 02/15/2012

Japan is becoming hip in China. Then there are European style leaders in China. I think what you say is true for now, but fading, and will soon be a dated truth, overtaken by new trends.