×

Playboy looks to expand in China (without porn)

Getty Images

Pornography may be illegal in China, but Playboy Enterprises - the pioneer of print adult entertainment - sees it as one of its most promising markets.

While the company is most famous for its risqué men's magazines, it also runs a merchandise business, selling wares from fashion apparel to travel luggage branded with its iconic bunny head logo, which have caught the fancy of Chinese consumers.

In 2014, Playboy generated $1.5 billion in annual retail sales across the globe, with more than a third derived from the mainland. Now, the company is looking to take its China business to new heights.

"Playboy has generated $5 billion in retail revenue in China in the last decade, we're looking to double that number over the next decade," Matt Nordby, president of global licensing and chief revenue officer at Playboy Enterprises, told CNBC on Wednesday.

"China is extremely important to our business," he added.

The company aims to grow its foothold through a new 10-year licensing deal with manufacturing and distribution company Handong United, it announced on Wednesday.

Playboy, which has been present in China for more than 20 years, had previously teamed up with several licensee partners in different parts of the country, making it more challenging to implement quality controls.

Read MorePorn and pot: The new business bedfellows

With Handong United now its primary manufacturer and distributor, it hopes to have better oversight and broaden its distribution network to 3,500 retail touch points from 3,100 currently.

"[Handong] is known for quality manufacturing and their relationship with retail across China," said Nordby. "We believe this new platform positions us for growth over next 10 years."

Playboy expects its growth in China will come from two areas: online sales and female consumers.

"Playboy has traditionally appealed to the male demographic in China, but we believe there's an opportunity to market our brand to females, particularly with our fashion apparel," he said.

The company currently derives around half of its revenues globally from the licensing of consumer products and the other half from its media division.

China is not the only Asian market where Playboy is looking to expand its reach. The company is also working on expanding into India, known to be a more culturally conservative market.

"It's difficult to ignore the growing middle class in India, our brand resonates there," said Nordby.

Last year, Playboy opened its first night club in the country. Located in the city of Hyderabad near a college campus, the company is looking to position itself as an aspirational lifestyle brand for the 18-35 year old demographic.

"Phase two will be rolling out consumer goods, we expect to do that later in the year," he said.