US fashion retailer Gap is to sell off its Chinese business to local ecommerce service provider Baozun.

Baozun said that it will acquire Gap Shanghai Commercial and Gap Taiwan Ltd, for an initial $40 million and rising to more than $50 million. The transaction is subject to regulatory approval and is expected to go through in the first half of 2023.

Both units recorded losses in 2021. The Shanghai business lost $35.34 million, while the Taiwan unit lost $6.24 million.

Baozun, which also operates the Chinese online platform of JD.com, said that Gap has granted it the exclusive rights to manufacture and sell its products in the Greater China area in an initial deal which will last 10 years.

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