SANTERAMO IN COLLE, Italy – Global leather and fabric upholstery manufacturer Natuzzi has reached a preliminary agreement with full line furniture and bedding vendor Kuka to form a joint venture to expand the Natuzzi retail network in China.

Subject to terms and conditions set forth in the preliminary agreement and to obtaining any applicable authorizations, Natuzzi will contribute the exclusive distribution right to use the Natuzzi Italia and Natuzzi Editions trademarks in a Chinese corporate entity and that Kuka will invest $77.6 million to sustain the expansion of the Natuzzi retail network in Greater China.

Of Kuka’s investment, $17.9 million is in exchange for Natuzzi’s contribution of the right to perpetually use the Natuzzi Italia and Natuzzi Editions trademarks in Greater China, which includes mainland China, Hong Kong, China and Macao. Natuzzi and Kuka will own 49% and 51%, respectively, of the Chinese corporate entity.

The preliminary agreement also indicates that Natuzzi will contribute its existing stores and commercial organization in China. As of the end of third-quarter 2017, Natuzzi operated 10 directly owned stores in China, with another 159 locations run by third-party dealers.

The joint venture also would utilize Natuzzi’s existing retail management team, who will be employed by the joint venture. It is also expected that the joint venture will continue existing distribution agreements related to the Natuzzi network of franchised stores. The preliminary agreement also suggests that Natuzzi will retain the right to use the Natuzzi Italia and Natuzzi Editions trademarks for all manufacturing activities, including in Greater China, and distribution in countries other than Greater China. Additionally, the agreement provides for Natuzzi to supply the joint venture with products at a certain discount.

“We have known Kuka for many years and have always admired their growth oriented entrepreneurial spirit and approach,” said Natuzzi Chairman and CEO Pasquale Natuzzi. “This historic partnership will enable Natuzzi and Kuka to become the leading player in the emerging and growing market for branded luxury home furnishings in Greater China.”

“This is the right product and brand for the new growth we see in the Chinese home furnishing market,” said Kuka Chairman Jiangsheng Gu. “By combining Natuzzi’s unparalleled position as the top brand in home furnishings with Kuka’s strong position in China, we as partners will be a force with which to be reckoned in the years to come.”

The parties expect to promptly start preparing the documentation to implement the partnership. If the parties fail to reach a final agreement by March 31, the preliminary agreement will be void.

(Source:furnituretoday.com)