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Yahoo
17 hours ago
- Business
- Yahoo
Häagen-Dazs, Starbucks Mull Overhauls in China to Fend Off Powerful Local Rivals
(Bloomberg) -- The consumer landscape in China was very different in the 1990s, when Häagen-Dazs and Starbucks ventured in with premium products that were alien to most people. They made huge inroads nonetheless, opening outlets at breakneck pace and raking in revenue. But times are changing, and they, like many other Western brands, are reassessing their approach to the world's second-biggest economy, including possibly selling their businesses. Security Concerns Hit Some of the World's 'Most Livable Cities' As Part of a $45 Billion Push, ICE Prepares for a Vast Expansion of Detention Space As American Architects Gather in Boston, Retrofits Are All the Rage How E-Scooters Conquered (Most of) Europe General Mills, which owns Häagen-Dazs, is working on a potential sale of its more than 250 stores in China. Starbucks Corp. is sounding out interest in its business in the country, where it has over 7,750 outlets. Sporting goods retailer Decathlon SA has started a process to sell about 30% of its China business. Reasons for this shift include the fierce competition from Chinese companies, which have evolved into nimble and sophisticated rivals with a deep connection to local consumers. Iconic brands including Apple Inc. and Nike Inc. face intensifying rivalries with local names such as Huawei Technologies Co., Xiaomi Corp., Anta Sports Products Ltd. and Li Ning Co. The economic malaise in the wake of Covid has also affected spending habits. 'Multinationals face competition from local rivals and shifting demands, especially younger generations prioritizing value for money and emotional resonance,' said Chen Jie, global head of mergers and acquisitions at China International Capital Corp. 'To survive and succeed, they must develop localized strategies.' Häagen-Dazs and Starbucks have both introduced products catering more directly to the local market, such as specialty Lunar New Year mooncake ice creams and braised pork flavored latte. Starbucks, feeling the heat from rapidly rising homegrown chains like Luckin Coffee Inc., also recently announced price cuts in China on tea-based and Frappuccino beverages, a strategy that contrasts with its US operations, where it is streamlining its menu to emphasize coffee. McDonald's Corp.'s China menu includes offerings such as congee and luncheon meat burgers, while Yum China Holdings Inc., which operates KFC and Pizza Hut, has egg tarts, Peking duck-style wraps and durian pizzas in addition to its more traditional fare. Even with decades of experience in China under their belts, international firms are considering fresh partnerships to help weather today's challenges. 'In many cases, these brands have long operating histories in the country, and identifying Chinese partners who can bring skills, technology and capital is another form of localization,' said Richard Wong, head of Asia Pacific M&A at Morgan Stanley. 'MNCs continue to view China as a highly important market.' China's sluggish economy has been difficult for most retailers and uncertainty is likely to keep swirling as tariff threats and armed conflicts overseas persist. 'With this backdrop, some are evaluating strategic options for their assets, including bringing in a minority partner or selling out entirely,' said Weiwen Han, a senior partner at Bain & Co. in Hong Kong. 'This trend is particularly clear in sectors such as consumer and retail.' Beijing is prioritizing domestic consumption in its pursuit of 5% economic growth this year, and May retail sales were encouraging, accelerating at the fastest pace since December 2023. But economists are unconvinced that momentum will persist, and companies need to be positioned to capture what growth they can. 'The Chinese market is getting more mature, so there is no more low hanging fruit with fast growth and development,' said Jean-Christophe Vallat, managing director and head of industrials and consumer at BNP Paribas SA. 'Chinese consumers still have cash to treat themselves when it comes to small personal expenses, and they are more educated and mature, so they have developed fancy local tastes that only local players can identify and adapt to, given the fast-changing tastes and low loyalty,' he said. In another case, after buying the remaining equity interests in Burger King China in February, Toronto-based Restaurant Brands International Inc. said it planned to engage advisers to help find a new local partner. There's a rising number of 'China operation carve-out deals, which involve introducing local strategic partners through equity restructuring,' CICC's Chen said. 'Such moves could potentially help multinational corporations thrive in China's market and capture new growth opportunities.' --With assistance from Dong Lyu. Ken Griffin on Trump, Harvard and Why Novice Investors Won't Beat the Pros American Mid: Hampton Inn's Good-Enough Formula for World Domination How a Tiny Middleman Could Access Two-Factor Login Codes From Tech Giants The Spying Scandal Rocking the World of HR Software US Allies and Adversaries Are Dodging Trump's Tariff Threats ©2025 Bloomberg L.P.
Bloomberg
19 hours ago
- Business
- Bloomberg
Häagen-Dazs, Starbucks Mull Overhauls in China to Fend Off Powerful Local Rivals
The consumer landscape in China was very different in the 1990s, when Häagen-Dazs and Starbucks ventured in with premium products that were alien to most people. They made huge inroads nonetheless, opening outlets at breakneck pace and raking in revenue. But times are changing, and they, like many other Western brands, are reassessing their approach to the world's second-biggest economy, including possibly selling their businesses. General Mills, which owns Häagen-Dazs, is working on a potential sale of its more than 250 stores in China. Starbucks Corp. is sounding out interest in its business in the country, where it has over 7,750 outlets. Sporting goods retailer Decathlon SA has started a process to sell about 30% of its China business.
