Farfetch, Alibaba, Richemont and the Pinault family, which owns the French luxury goods company Kering, have entered a global partnership with the declared intent of providing luxury brands with “enhanced access” to the Chinese market as well as accelerating the digitization of the global luxury industry.

Under the agreement, Farfetch will launch luxury shopping channels on Alibaba’s platforms, Tmall Luxury Pavilion and Luxury Soho as well as Alibaba’s cross-border marketplace Tmall Global. The new channels expand Farfetch’s reach to Alibaba’s 757 million consumers.

Daniel Zhang, the chairman and chief executive of Alibaba Group, noted that China is expected to account for half of global luxury sales by 2025. He stressed that through the partnership with Farfetch and expanding business relationship with Richemont, “we will accelerate the digitization of the global luxury retail industry and transform the luxury shopping experience for consumers.”

Richemont’s own e-ecommerce platform Yoox Net-a-Porter already has an integration on Tmall Luxury Pavilion for the Net-A-Porter website.

Alibaba, Richemont, Pinault to invest an aggregate $1.15 billion in Farfetch

Alibaba and Richemont will invest $300 million each in private convertible notes issued by Farfetch. The notes will not bear a coupon and are scheduled to mature on Nov. 15, 2030. They can be swapped for Class A shares at a conversion price of $32.29 each.

The Chinese internet company and the Swiss luxury goods group will also invest $250 million each in Farfetch China, taking a combined 25 percent stake in a new joint venture that will include Farfetch’s marketplace operations in the China region. Alibaba and Richemont will have an option to purchase a further combined 24 percent of Farfetch China after the third year of the joint venture’s inception.

The two companies will explore additional opportunities to work with Farfetch to provide services to luxury brands. The investments by the Chinese and Swiss companies in Farfetch China and the establishment of the joint venture are expected to be completed during the first half of 2021.

Separately, Artemis, the holding company of the Pinault family, has agreed to increase its existing investment in Farfetch with a $50 million purchase of Class A ordinary shares.

The partners have also launched Luxury New Retail (LNR), which is described as a “visionary initiative” to leverage Farfetch’s and Alibaba’s omnichannel retail technologies to serve the luxury goods businesses. The solutions, powered by Farfetch, will address both mono-brand and multi-brand distribution strategies for luxury brands and provide access to Farfetch and Tmall Luxury Pavilion’s marketplaces via a single integration.

Farfetch and Alibaba have also formed a steering group to develop LNR. Richemont’s chairman, Johann Rupert, and Artemis’ chairman, François-Henri Pinault, will join the steering group.

The deal also reinforces the alliance between the Pinault family and Richemont after Kering, which is known for the Gucci brand, and the Swiss group, which owns Cartier, among other brands, merged their eyewear businesses into Kering Eyewear.