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Cartier Meets Tmall in Richemont-Alibaba Online Luxury Tie-Up

Richemont and Alibaba are teaming up in a venture that strengthens the Swiss Cartier owner’s lead in luxury e-commerce and gives the Chinese online retailer more credibility in selling jewels and $100,000 watches.

The venture will create mobile apps and set up online stores on Alibaba’s Tmall luxury platform under Richemont’s Net-a-Porter and Mr Porter formats, the Geneva-based company said Friday.

The move shows how serious Richemont is about online sales as it seeks ways to sell Vacheron Constantin and IWC Schaffhausen watches across China without resorting to boutiques in every city. The partnership also comes as customs authorities in the country become more vigilant against luxury imports from abroad, making it crucial to be able to sell to consumers in their home market. Even as economic growth cools, Chinese shoppers will probably make up almost half of the global luxury market by 2025, according to Alibaba Chief Executive Officer Daniel Zhang.

“There’s not a luxury-goods company in the world that can catch up with where Alibaba is at,” Richemont Chairman Johann Rupert told reporters on a call. “We simply don’t have the tools.”

Richemont has built its own e-commerce platforms by acquiring companies like Net-a-Porter and Yoox SpA, merging them to form a unit known as YNAP. At a time when multibrand boutiques and department stores are struggling, Richemont’s online marketplaces, which are open to other brands, have become especially important for smaller luxury-goods makers to expand their reach. The deal is a chance for rising designers like British dressmaker Molly Goddard or smaller heritage brands like Italy’s Missoni that sell on YNAP sites to reach Chinese consumers.

YNAP owns 51 percent of the venture. Alibaba, which has 49 percent, said the companies will explore further ways to cooperate.

“Richemont will gain much more traction in the Chinese online market,” wrote Rene Weber, an analyst at Bank Vontobel AG. “It will strengthen YNAP’s position as the world’s leading online luxury retailer.”

Alibaba has been pushing to boost its luxury offer, but top brands have been reluctant to trust the sprawling marketplace to preserve their cachet. Despite forging partnerships to fight counterfeiting with the likes of Louis Vuitton owner LVMH, Alibaba has faced scrutiny for fakes found on its sites. Richemont’s credibility may help convince other luxury purveyors to join the platform.

Rupert said the deal will benefit sales in the medium term, and added Alibaba’s systems pose a low-risk scenario for counterfeiting.

Richemont has made strides in bolstering its e-commerce business this year, having having spent 2.7 billion euros ($3.1 billion) to buy out a minority stake in its YNAP unit and acquiring U.K. timepiece reseller Watchfinder.

“I don’t think there’s any doubt in anybody’s mind that the new luxury and new shopping experience will be in a different form,” Rupert said. “New retail will hopefully maximize presence while not costing an enormous amount of new investment.”

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