The share price of AuMake International Ltd [ASX:AU8] rose immediately upon opening this morning, on news that the company has secured a partnership with one of the largest e-commerce platforms in China.
At time of writing, AuMake’s share price is trading at 29 cents — up 5.46% from its closing price prior to the recent trading halt announced Friday, 7 December.
AuMake’s exclusive strategic agreement buoys share price
AuMake announced this morning that it has signed an exclusive strategic agreement with JD Worldwide, to cooperate, explore and lead industry development in Australia and New Zealand.
The partnership mirrors the relationship between Alibaba’s TMall and Chemist Warehouse. It will leverage JD’s online and logistics capability in China with AuMake’s retail store capability in Australia, to build a new online platform for Australian and New Zealand products to reach Chinese consumers.
Mr Tian Zheng Dong, JD Worldwide Global Business Development Director, said that the company has had its sights on the Aussie market for quite some time.
‘As one of the pre-eminent e-commerce platforms in China, we recognise the importance of having a strong retail store distribution network in Australia in order to create initial brand recognition within the Australian market.’
‘We intend to initiate implementation immediately, and upon full integration, we have targeted sales of no less than 10 million RMB (A$2 million) per month, with exponential growth potential.
‘This latest development with JD Worldwide is another important step in the development of AuMake’s multi-channel platform in Australia.’
AuMake’s multi-channel approach is anticipated to provide significant and sustainable revenue growth with growth margins of 25–30% within 12 months.
What’s next for AuMake?
AuMake will be looking to grow their own-brand offerings and tap into the Chinese market further.
The agreement with JD is in effect a new front in its efforts to expand its reach in China.
The company has identified locations for 15 more stores in Australia’s major cities.
A major source of income for the company is daigou purchasers which are personal shoppers that ship a range of Western products back to China on behalf of Chinese consumers.
The company is looking for an operational breakeven in 2019.
While retail is widely considered to be struggling, AuMake could be well positioned to avoid the turmoil surrounding the industry as it taps into a booming Chinese middle class hungry for Western health and wellness products.
According to McKinsey & Company, urban household income in China will at least double by 2022.
For Money Morning