US apparel retailer Gap will sell its Greater China businesses to e-commerce service provider Baozun.

Gap has granted Baozun exclusive rights to manufacture and sell its products in the Greater China area. The arrangement can last two decades, with an initial term of ten years that can be renewed twice for each five-year term. Baozun will acquire Gap Shanghai Commercial and Gap Taiwan, which operate the whole business of Gap Greater China, with a primary deal size of $40 million and no more than $50 million for adjustment.

Gap had been in any case reducing its manufacturing exposure to China over the past few years and has been migrating sourcing out of China.

Headwinds persist for global consumer brands in the world’s second-largest economy.Deal makers have seen opportunities for merger and acquisitions involving multinational firms that look to spin off their China units, as growth outlook in the country grappling with strict Covid-curbs remains uncertain amid intensifying competition with domestic brands.

Earlier this year, American fast fashion retailer Forever 21 made its third effort to enter China after having left the market twice, while major sportswear companies Nike and Adidas lost ground to local brands Li Ning and Anta in recent years.