Chinese way for Burberry

The move by the luxury goods group will enable it to implement its own customer services, marketing and IT strategy, as well as to open new stores.

Chief executive Angela Ahrendts said there was already strong awareness of the Burberry brand, driven by its 50 franchise-run stores in 30 cities.

She added: "We plan to drive productivity in existing stores and open new stores, while rapidly implementing our digital marketing initiatives to further reinforce the brand in this exciting market."

Nine of the stores are in Beijing and four are in Shanghai, contributing to total sales of 75m in 2009 and operating profits of 14m.

The move was welcomed in the City as Burberry shares rose 3 per cent.

Numis Securities analyst Nick Coulter said the company had secured a key distribution platform in a "high growth and increasingly wealthy Chinese market", with the potential for more than 100 stores.

"This transaction again demonstrates the success of Burberry's strategy to control the distribution of its product," he added.

Burberry said the deal was expected to add up to 20m to group operating profits in the 2011/12 financial year.

In addition to the stores in China, it directly operates 13 stores in Hong Kong, one in Macau and 19 in Taiwan.

There are 139 retail stores globally, as well as 140 concessions and 44 outlet shops.

Earlier this week, Burberry said strong demand for accessories and raincoats meant revenues rose by a better-than-expected 24 per cent in the quarter to June 30, building on a 23 per cent jump in profits to 215m in the last financial year.