Fashion website Asos is closing its local operations in China at a cost of £10m, less than three years after it launched.

The division, which has racked up costs as it struggled to win over Chinese shoppers, made a loss of £4m this year.

Asos initially spent £9m launching the local service in 2013, £3m more than it had predicted, and the unexpected costs contributed to a slump inits share price in 2014.

Since then the Chinese market has softened and Asos has prioritised expansion in the UK, Europe and the US.

The company has faced difficulties with the Chinese postal service and with local preferences for other brands over its own label. Asos has also faced tough competition from the Chinese company Alibaba, which dominates the online fashion market in China.

Freddie George, an analyst at financial services company Cantor Fitzgerald, said: “Asos always predicted big losses at first but they thought by now they would be generating a lot of sales and that just hasn’t happened. It has taken longer and the economy has nose dived so the middle classes can’t afford the prices that Asos wants to get.”

On Thursday, the company said it planned to serve shoppers in China via its international Asos.com site, where they would have access to about 80,000 products, compared with 6,000 on the local site.



Nick Beighton, who took over from co-founder Nick Robertson as chief executive last year, said: “We’ll continue to do business in China. We are simply serving our growing customer base there in a more efficient, less costly manner.”

