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Zhu Wenqian

Julie Zhang

Amid rapid market shifts in China, more foreign companies including retail and pharmaceutical players are adopting new approaches, selling their China businesses to local companies, teaming up with domestic partners or setting up joint ventures to stay competitive.
“Everyone wants to remain in the market,” said Colin Banfield, head of Asia mergers and acquisitions at Citigroup. “The China market’s absolute size is still too important for multinationals [MNCs] to think about exiting completely, and that’s not the mindset.”
Trends in China would eventually play out in the rest of the world, making it imperative that MNCs continue taking part in the consumer market, he said, adding that China was “a laboratory of sorts for the way that you sell, promote and deliver your products to the consumer”.
“If you are out of China, you don’t have that perspective, and it won’t benefit you in the long term,” Banfield said.
Following recent moves by Starbucks and Burger King, General Mills announced earlier this month that it would offload its Häagen-Dazs shops and gifting business in China to an investor group led by local chain Ningji Lemon Tea. Analysts viewed the deal as a strategy revamp to better adapt to China’s fast-changing market. Citi is the exclusive financial adviser to General Mills on the transaction.
In November, Starbucks agreed to sell a 60 per cent stake in its Chinese operations to domestic private-equity firm Boyu Capital. Meanwhile, Restaurant Brands International, the parent of Burger King, decided on a joint venture with CPE Yuanfeng, a Chinese alternative asset manager, to run its operations in China.
“The mindset from General Mills is that there is an opportunity to grow the Häagen-Daz shops and gifting business by leveraging the expertise of Ningji and its consortium partners in store management, and to grow that business across the broader China market,” Banfield said. “That’s a good combination of a local partner and what they can do. There was a lot of interest from parties to partner up.”
China is a dynamic marketplace, he added.
“The consumer is incredibly discriminating,” he said. “They like to be adventurous when it comes to experimenting with new tastes, formats, brands and products.”

The consumer market remains challenging for most multinationals, but there are exceptions. US warehouse supermarket chains Costco and Walmart’s Sam’s Club remained incredibly successful in China, Banfield said, as they had managed to adapt to local consumer tastes.
Other foreign companies have actively cooperated with local partners since entering the market. American restaurant chain Shake Shack’s outlets in China are run by Hong Kong’s catering giant Maxim’s, and the chain has resonated well with Chinese consumers.
Meanwhile, in the pharmaceutical sector, many MNCs are partnering with Chinese drug makers, with products developed by local firms proving attractive to global markets.
“The foreign pharma companies understand the importance of the Chinese pharma companies and their innovative product line-up,” Banfield said. This has led to a spate of transactions for the licensing out of specific drugs and therapies, he added.
Swedish wound care and surgical products provider Mölnlycke recently formed a joint venture with Zhejiang province-based Zhende Medical, a domestic supplier of medical care and protection items. The two aim to combine their business portfolios and co-develop future products for the 30 billion yuan (US$4.4 billion) market.
“We see China as one of the leading markets, driven by population growth, ageing demographics and rising incidence of chronic wounds,” said Guillaume Joucla, interim CEO of Mölnlycke. “Today, no company can seriously consider global growth without looking at China.”
The partnership would build on complementary strengths to expand product offerings in China by combining innovation with strong local market access, as the combined business would cover nearly 10,000 hospitals, 200,000 pharmacies and an e-commerce network, he said.


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General Mills and Mölnlycke follow Starbucks, Burger King in forging partnerships to better tap local market insights


General Mills and Mölnlycke follow Starbucks, Burger King in forging partnerships to better tap local market insights.


To keep up with China’s fast-changing consumers, MNCs adapt via local alliances

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}General Mills and Mölnlycke follow Starbucks, Burger King in forging partnerships to better tap local market insights

General Mills and Mölnlycke follow Starbucks, Burger King in forging partnerships to better tap local market insights