GAP is one of the largest clothing companies in the U.S. It just announced that it would sell its subsidiary operating in China to a local e-commerce firm, ending its 12-year struggle with doing business in China.

The decision is partly due to China’s “zero-COVID” policy and widespread and spontaneous lockdowns. 

The policy causes people to spend less money, hurting brick-and-mortar businesses in China. In the meantime, experts have lowered their growth forecast for the country.

The COVID policy, coupled with local Chinese brands becoming increasingly competitive, has forced many foreign brands to shut down their operations on the mainland.

On Tuesday, November 8, Chinese e-commerce giant Baozun said it had reached a deal to buy Gap Shanghai Commercial and Gap Taiwan Ltd, which operate the whole business of Gap Greater China, for $40 million and no more than $50 million for adjustment.

In a filing with the Hong Kong stock exchange about the deal on Tuesday, November 8, Baozun said that the Shanghai branch of GAP lost $35 million last year, while the Taiwanese branch lost about $6.3 million.

GAP entered mainland China in 2010, with the first four stores in Shanghai and Beijing. Four years later, by 2014, GAP boasted 100 stores in mainland China and Taiwan.

In recent years, the number of physical GAP stores has drastically reduced. For example, in Beijing, GAP shut down several stores, including APM, its first flagship store in China.

This year, GAP is closing stores on a large scale all over the country.

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