Month: January 2012

Private Equity Firm Invests in China Outfitters

Many eyes are on men’s casual wear companies at the moment in China. The global private equity firm KKR & Co L.P. has announced that it plans to invest US$60 million in the Hong Kong initial public offering of China Outfitters Holdings Ltd 1146.HK.

As David Liu, CEO of KKR Greater China, said,

“The menswear market in China has enormous growth potential. Market leaders such as China Outfitters have significant room to increase market share.”

Private equity firms have been moving more into the field of offering pre-IPO financing. This field, prior to the 2008 financial crisis, was almost exclusively filled with hedge funds.

China Outfitters has menswear manufacturing and sales locations in China, but also have a long list of foreign brands. Their foreign brands include JEEP, Santa Barbara, Polo & Racquet Club and London Fog. In China, they make and sell menswear.

Baby Business Booming in China

Those in the baby business should definitely take note of China’s family planning. According to the National Bureau of Statistics predictions, China will experience a massive population boom from 2005 through 2020, with the country’s birth rate peaking in 2016.

Even more significantly, many Chinese families will target 2012 as the year to have a child, as it’s the year of the dragon. This icon symbolizes power and wealth, and 5% more babies are born under the dragon than are born with any other symbol.

As Jessie Guo, Jefferies Group Inc.’s Hong Kong-based head for consumer research in Asia, recently said, “The baby boom is a good investment idea in the near term. The growth is likely to sustain for the next two to three years.”

Michele Mak, a consumer-sector analyst at BNP Paribas chimed in and said, “The dragon year baby boom is almost a sure thing, which will boost the demand for infant products such as baby formula, diapers and clothes.”

Many people still believe that China has a strict one-child policy; that policy from 1979 has been modified to accommodate for China’s aging labor force. Couples who are both only children are now being allowed to have two kids of their own; and rural couples whose first child is a girl older than four are also allowed to have another child.

With the rise in income, this is set to create a niche market for baby-food and baby-care products that many would be smart to be part of.

Chinese Study on Branding Shows Important Changes

Agency Millward Brown and media company WPP have recently looked into Chinese branding and consumer opinions. Looking at the 50 most valuable Chinese brands, they found that 83% of consumers outside of China couldn’t name a single Chinese brand or company.

China, of course, wants to create a global present, as Adrian Gonzalez, the head of Greater China at Millward Brown, explained. Chinese brands clearly need to do much more work to become distinguishable in the competitive marketplace internationally.

In China, however, the brand study found that, of the 35,000 consumers, Chinese brand value has grown to US$325 billion in the last year. This is a 16% increase from the previous year.

Gonzalez said that today, “We’re seeing in many cases now that foreign companies feel the best way to succeed in China now is through acquiring a Chinese company.” He pointed out that this was not the case previously.

The study also showed a significant change in the use of state-owned enterprises, as the study showed that “Government protectionism is starting to wear thin.” This is a dramatic contrast to the findings in the 2010 study. Half of the brands that were on the list that were less favorable with consumers were state-owned.

The Macro Euro-China Enterpreneurs Club

China and Europe are strengthening ties, as the Macro Euro-China Entrepreneurs Club recently signed an agreement with the government of Heilongjiang of China’s northeastern province to help 100 European firms. These firms will attend the China Harbin International Economic and Trade Fair (HTF) next year.

The fair will take place from June 18-20, 2012 and will include 100 firms from 15 European countries. Commerce official Chu Zhihui of Heilongjiang said that the member firms of the club have expressed their interest in many areas include food processing and car production.

The Macro Euro-China Entrepreneurs Club which is based in Paris is a non-profit organization that serves as a match maker between European firms and investment opportunities in Asia.

This year’s upcoming fair is jointly organized by the Ministry of Commerce, the National Development and Reform Commission and the China Council for the Promotion of International Trade and the local government. It’s been taking place in Heilongjiang for the last 22 years and had $17.82 billion worth of overseas-related contracts just last year.