Jack Wolfskin to Buy Out Chinese Distributor

Jack Wolfskin has reached an agreement to buy out its Chinese distributor and licensee during the next two years. The eventual plan is to clear the way for a new subsidiary it will establish in the People’s Republic of China (PRC), according to reports. Jack Wolfskin is Germany’s largest domestic outdoor brand, but reported lower sales in 2013 due to growing competition in both its home market and greater Europe.

In exchange for a two-year agreement to provide JW PRC Co. with consulting and management services, Tri State Holdings Limited of Hong Kong  agreed Dec. 24 to relinquish licenses held by its wholly owned subsidiaries to distribute Jack Wolfskin products in the PRC, Hong Kong and Macau and manufacture Jack Wolfskin branded T-shirts/Polo shirts in the region. The licenses were set to expire in December and July of next year respectively.

Under the new agreement, Tristate’s Shanghai affiliate will provide consulting services to JW PRC Co until December, 2017. During the period, Jack Wolfskin will pay Tristate Shanghai a service fee amounting to substantially the entire pre tax and interest earnings of  JW  PRC  Co  for  the  period  from  termination  to  Dec. 31,  plus an additional service fee which will be determined based on certain agreed percentages of the gross  profits  of  JW  PRC  Co  in  2016  and  2017. Tristate, which distributes products and runs retail operations for multiple brands, will also be re-appointed  as  a distributor of the Jack Wolfskin branded products in Hong Kong and Macau.

In exchange, Shanghai Tristate will advise and assist JW PRC Co on the development, procurement, sale and marketing of the Jack Wolfskin branded products in the PRC; help formulate and implement a growth strategy; and work with JW PRC to bring over as many of its franchisees, employees and offices as possible during the two-year transition period. At the end of the period, JW PRC will acquire relevant inventory at landed cost.