10 8
China Goes West
acquisitions is no accident. In 2012, Chinese Premier Wen Jiabao highlighted strategic industries in China whose globalization efforts the government intends to promote. These industries include: next generation information technology, energy and mining, automotive, home appliances, financial services, equipment manufacturing, construction, internet technology, and medicine. With regard to the consumer goods sector, Premier Wen instructed Chinese brands to “seek to expand market experience and build talent reserves acquiring international luxury brands in order to enter the global consumer market.”22 Given the number of years and resources required to build a global brand through one’s own efforts, M&A is a key means to help propel a Chinese company’s brand into the lives of international consumers. Perhaps one of the most intriguing brand acquisitions made to date by a Chinese firm is the acquisition of 80-year-old UK breakfast cereal brand Weetabix by China’s state-owned food conglomerate Bright Food. Weetabix, a long-time family owned company, was bought out by a Texas private equity firm and eventually sold to Lion Capital in 2004. Given its strong cash position, Bright Food acquired a controlling stake in Weetabix from Lion Capital in May 2012. At the time of the acquisition, Weetabix exported to over 80 countries, and had approximately 2,000 employees with annual sales in excess of about £1.2 billion (approximately $1.9 billion).23 While UK consumers have shown a long-time love for the crispy wheat cereal, it seems unlikely that Chinese consumers will develop a taste for Weetabix anytime soon. Typical Chinese breakfast options include favorites like youtiao, crispy fried dough sticks dipped in soymilk, or a hot rice congee called zhou. Chinese consumers have yet to embrace mainstream global cereal brands from companies like General Mills or the Kellogg Company, and it is unlikely that Weetabix will be any more successful in appealing to the taste buds of Chinese consumers. All signs suggest that the Weetabix acquisition was aimed first and foremost at acquiring the long-established Weetabix brand name to sell internationally, rather than marketing the cereal in China’s domestic market. In fact, Wang Zongnan Chairman of Shanghai-based Bright Food, has clearly expressed the company’s aspirations to internationalize its business operations and expand its global supply chain of food products. Wang