FT : Chinamaxxing in consumer M&A
You lace up a pair of Puma shoes, don Everlane shorts and an Arc’teryx top for a jog around New York City’s Central Park. Afterwards, you stop into a Blue Bottle for a coffee.
You’ve interacted entirely with brands that are backed or controlled by Chinese companies on your morning run.
Chinese outbound M&A hit a five-year high in the first quarter of this year. The growth comes as the country’s industrial and consumer groups look to expand beyond their deflationary home market and help stagnant foreign brands in China.
Chinese apparel conglomerate Anta’s purchase of a €1.5bn stake in the struggling Puma brand is a case in point from earlier this year.
Most recently, and surprisingly, came the news that fast-fashion retailer Shein would take over US clothing brand Everlane, which prides itself on sustainability and transparent labour practices.
China’s overall outbound investment was $27bn last year, the highest since 2020, driven in part by mining assets in emerging economies. Its vast electric vehicle industry is also expanding globally.
However, that figure is dwarfed by the $200bn-plus of outbound M&A in 2016, shortly before trade tensions erupted in President Donald Trump’s first term and continued to escalate over the ensuing decade.
While consumer goods are typically less sensitive than many other sectors, there has been intense scrutiny in Europe, where the EU and France have launched investigations into Shein’s sales of childlike sex dolls, weapons such as knuckle dusters and other illegal objects through its third-party marketplace.
JD.com’s bid for Ceconomy, a German electronics retailer, has been delayed by regulatory review.
More broadly this wave of consumer M&A is also coming at a time when some western consumers are showing more interest in the world’s second-largest economy, with the term Chinamaxxing circulating on social media.