The North Face x Gucci advertisement in a Shanghai mall.

SHANGHAI — VF Corp., the outdoor gear-maker that owns The North Face, Vans, Supreme and Dickies among others, is shifting its Asia-Pacific headquarters away from Hong Kong in favor of Shanghai in a major reorganization of the group.

Shanghai is not the only city that will see increased investment from the firm. Among the changes, the brand’s product supply hub will leave Hong Kong to be redesigned as a “hyper-digital supply chain” centered out of Singapore. The company will also set up a new shared services center for the region in Kuala Lumpur, Malaysia, which will focus on back-end business divisions including digital technology, finance, human resources and logistics.

The transition is planned to be carried out in phases over the next 12 to 18 months, with the first relocations expected in April, VF said. The company employs approximately 900 office and retail associates in Hong Kong.

“Today’s announcement reinforces our commitment to invest in our business across the Asia-Pacific region, while also supporting VF’s overall transformation plan to become a more consumer-minded, retail-centric and hyper-digital enterprise,” said Steve Rendle, VF’s chairman, president and chief executive officer. “We established our presence in Asia 25 years ago and have continually shaped our business around the region’s many evolving opportunities. Now, we’re further transforming our Asia operations so we can better serve this fast-moving, technology-driven market with increased speed and capabilities.”

The restructuring can be interpreted as a reflection of the fast-growing significance of the mainland Chinese market, which has shown a steady recovery post-COVID-19, and the declining relevance of Hong Kong, which has not managed to control the pandemic quite as tightly and is also weighed down by the ongoing political crisis.

VF maintains that Hong Kong remains a key market for its brands, however it would not be surprising to see more large businesses — and not just in fashion — follow suit in 2021 by moving their Asia headquarters to mainland China. The cost base for operating in Hong Kong is hefty with both retail and office space commanding some of the highest in the world. At the same time, political freedoms have greatly winnowed in the last year with the implementation of a new national security law. Hong Kong police arrested 55 pro-democracy activists just this past week, prompting the foreign ministers of the U.S., the U.K., Canada and Australia to express “serious concern.”

VF mentioned in its statement that with the move, it hopes to “forge stronger and more relevant relationships with Chinese consumers.” That being said, the company sends somewhat conflicting signals by having Asia-Pacific CEO Kevin Bailey based out of the company’s Denver global headquarters. Bailey, who had been based in Hong Kong, moved to Colorado in August last year. That same month, the company installed Winnie Ma as president of greater China who is based in Shanghai.

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