To keep up with China’s fast-changing consumers, MNCs adapt via local alliances
General Mills and Mölnlycke follow Starbucks, Burger King in forging partnerships to better tap local market insights
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.
“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.”