US sports merchandise giant Fanatics is making moves into China through a joint venture formed with Beijing-based private equity firm Hillhouse Capital.

Under the deal announced today (Thursday), the new joint venture will be based in Shanghai. It will seek to localise operations including product design, sourcing and licensing in the Chinese market.

Based in Jacksonville, Florida, Fanatics operates online stores and sells products for over 300 teams, brands and leagues. Its retail, in-venue and special event businesses have rapidly expanded to include more than 50 professional and collegiate programs, encompassing official flagship stores for some of the world’s biggest leagues and events.

“China has been a market we followed for a while, and we’ve been meeting with multiple partners in China trying to figure out how we approach it in the best way,” Zohar Ravid, Fanatics’ head of international corporate development, told the Reuters news agency. “The interest overall in the country around European football, and American sports is growing.”

The JV will seek to utilise Hillhouse’s expertise to build partnerships with e-commerce channels operated by the likes of Chinese tech giants Alibaba and Tencent, as well as selling in physical stores. With the global licensed sports merchandise market said to be worth $25bn (£17.7bn/€20.5bn), Ravid said Fanatics believes the Chinese market is “grossly underserved” and could be worth $3-5bn alone.

Fanatics in August raised $350m at a $6.2bn valuation and is said to be considering an initial public offering (IPO) later this year. Fanatics’ most notable recent deal came last month as Spanish LaLiga football club Atlético de Madrid announced a long-term extension to their e-commerce and manufacturing contract.

The new deal sees Fanatics retain global e-commerce and manufacturing rights for Atlético. In 2020 alone Fanatics delivered merchandise to Atlético fans in 96 different countries.