US luxury brand Coach Inc is positioning itself for significant growth in China by taking control of its distribution in the region.

The American design house, which makes handbags, footwear and accessories, said yesterday (28 May) that it is buying its retail businesses in China, Hong Kong and Macau from current distributor, the ImagineX group.

The deal will see a phased buyout of Coach's 24 retail businesses in Hong Kong, Macau and China over the next year.

Thibault Villet, Coach's president in Greater China, will lead the operations of these businesses.

Lew Frankfort, chairman and chief executive officer of Coach Inc, said: "Under the leadership of Mr Villet, we're now building an on-the-ground team and deepening our insights into the Chinese consumer.

"This experience, together with our capital strength and international brand recognition, provide a solid foundation for Coach's expansion in the Chinese market."

Over the past several years, the ImagineX group has opened several Coach locations in Hong Kong, Beijing and Shanghai.

But Coach now plans to accelerate this growth to 50 new locations over the next five years.

Market research indicates that by 2013 the China, Hong Kong and Macau premium handbag and accessories market will likely exceed $2.5bn, more than double its current size of $1.2bn.

Coach aims to be one of the top three imported handbag and accessory brands, with sales of over $250m and a market share of at least 10% by fiscal 2013 - up from about $30m and 3% today.

"With the investments we will make in stores, marketing, organisation and infrastructure, we're poised to replicate our success formula in Japan since taking control of the business there in 2001," explains Ian Bickley, Coach's international president.

ImagineX, which has acted as Coach's distributor in the region since 2003, will continue to provide distribution, logistics, human resources, accounting, payroll and information systems services following the transition.

The Coach team will focus on brand-building and direct management of the front end of the retail business.

The company also has five travel retail locations in the region, which will continue to be managed by third-party operators and are not part of this agreement.

The announcement coincided with the opening of Coach's new Hong Kong global flagship store on Queen's Road Central.