Following its landmark decision last month to let KFC operator Yum Brands (NYSE: YUM) purchase Little Sheep (HKEx: 968), China’s largest hot pot chain, Beijing has once again approved another foreign acquisition of a domestic big brand, this time allowing Nestle (Switzerland: NESN) to buy candy maker Hsu Fu Chi (Singapore: HSFU), a move that should encourage more such M&A. (English article) China’s controversial 2009 decision to veto the purchase of leading domestic juice maker Huiyuan (HKEx: 1886) by Coca Cola (NYSE: KO) sent a chill through the cross-border M&A market for major Chinese brands, as many interpreted the move — theoretically made on anti-monopolistic concerns — as a nationalistic reaction by Beijing technocrats reluctant to see a promising domestic name swallowed up by a foreign multinational. The veto created so much concern that it took more than 2 years for another company, Yum, to try a similar acquisition, again testing Beijing’s commitment to free trade and openness to letting its healthy companies get acquired by foreigners. This rapid succession of approval for the acquisition of Little Sheep followed by Hsu Fu Chi, Nestle’s biggest purchase in China to date, seems to indicate that China will take a more balanced approach to foreign M&A of its healthy brands in the future, which could provide a nice lift for stocks in other listed big brands like Huiyuan that enjoy a strong reputation in China. Of course, China will now expect reciprocal treatment in the West, such as for Shanghai-based food maker Bright Food’s pending acquisition of Australia’s Manassen, announced in August. (previous post) I don’t see any problems for this kind of cross-border M&A in popular consumer areas like food and restaurants, though the tech space may continue to be sensitive as evidenced by the derailment of Huawei’s planned purchase of a small US tech firm early this year. (previous post) All that said, this latest approval by China’s anti-monopoly regulator should breathe some healthy new life into cross border M&A in the consumer sector, bringing good news for both acquirers and acquisition targets both inside and outside China.
Bottom line: China’s approval of the sale of a leading candy maker to Nestle reaffirms its new commitment to allowing big consumer brands be purchased by Western firms, paving the way for more such acquisitions.
Related postings 相关文章:
◙ Little Sheep Gets Swallowed: Good for Yum, Good for China M&A 小肥羊被收购对百胜和中国是双赢
◙ Bright Finally Finds Tasty M&A in Australia’s Manassen 光明食品终於觅得“佳偶”
China is clearly excited about the prospect of cloud computing, as evidenced by the steady stream of big names like Alibaba, Huawei and Shanda (Nasdaq: SNDA) that have announced initiatives in the space this year. Now even Microsoft (Nasdaq: MSFT) is trying to get in on the act, announcing a major new cloud computing campaign for China. Whether any of these initiatives will ultimately work is another question, however, as China has yet to prove that it can lead in any major new technology like this. First let’s look at Microsoft’s latest initiative, which will see it build a cloud platform and trading center in the interior city of Chongqing. (
China-basing has become an unusually major theme in the current US election season, with rhetoric hitting a new high as politicians launch yet another anti-China investigation, this time targeting 2 of the nation’s most prominent exporters, Huawei Technologies and ZTE (HKEx: 763; Shenzhen 000063). Telecoms headlines were buzzing loudly late last week with word of the investigation, which was launched by the Republican-controlled House of Representatives to examine potential threats to national security posed by US-based telecoms networks built by Chinese companies. (
China Mobile’s (HKEx: 941; NYSE: CHL) brief chance to generate excitement for its struggling 3G network based on a homegrown technology is rapidly disappearing, with even the networking equipment sellers who once saw big bucks in the technology known as TD-SCDMA now starting to abandon the standard. Chinese media are reporting that the latest round of contracts to expand China Mobile’s struggling 3G network received only lukewarm response from equipment suppliers, who have quietly started raising their prices to help build a network based on the problematic technology. (
I wanted to start today with a report that shows that Chinese firms need some serious education in how to do good public relations and, equally important, need to understand when NOT to embark on high-profile campaigns. Just a day after I chastised telecoms equipment giant Huawei for its poorlyl-timed criticism of a US government decision (
In a move that shouldn’t surprise anyone, China top networking equipment maker Huawei, which has been working hard to win its first major business in the China-phobic US market, has been rebuffed in its bid for contracts to help upgrade emergency networks in America. This bid was a foolish one to start with, as these networks were already sensitive to begin with for obvious reasons, as many US politicians still see Huawei as an arm of the Chinese government intent on using its networking hardware for spying as well as commercial purposes. (
There’s a couple of interesting new hires out there from Chinese tech firms Huawei and Lenovo (HKEx: 992), which are both clearly aimed at boosting their global operations. Whether either will succeed is a different matter, though both look like good ideas to me at first glance. First Huawei, which has hired IBM (NYSE: IBM) as a brand strategy consultant for its push into tablet PCs, smartphones and cloud computing. (
Well, it seems we now know at least one company that’s going to adopt Baidu’s (Nasdaq: BIDU) new mobile operating system, which it launched with fanfare last week (
history at new product development isn’t very strong. But I’ll also take this rare opportunity to break with the critics and say that Baidu’s new OS at least offers an interesting China-specific alternative to the other products on the market, as well as special access to Baidu’s market-leading search technology. Baidu has already proven that Chinese Web surfers do prefer a China-specific product to a one-size-fits-all approach like Google’s or Yahoo’s (Nasdaq: YHOO), so perhaps the same will be true for mobile Web surfing. Still, Dell is hardly a big name in the mobile Internet space, and, in fact, I don’t think I’ve ever seen anyone here in China using a Dell brand mobile phone or tablet PC. To succeed, Baidu will have to sign up some bigger cellphone makers in the next few months, with domestic names like ZTE (HKEx: 763; Shenzhen: 000063), Lenovo (HKEx: 992), TCL (Shenzhen 000100) and Huawei looking like the best candidates. If it can do that, and if its mobile OS proves reliable and user friendly, I would give it as high as a 50 percent chance of gaining a significant portion — perhaps up to 15 or 20 percent — of China’s mobile OS market.
