China’s financial authorities have scrutinized in 2017 many investments by Chinese companies, but the purchase by Fosun of the Asahi 19.9% stake in China’s key brewer Tsingtao might go down well with them because the capital goes into a domestic company, explains business analyst Ben Cavender to Reuters.
“Fosun has been able to pick up the shares at a fairly significant discount,” said Ben Cavender, Shanghai-based principal at China Market Research Group, adding there was room to grow both at home and overseas if Fosun could help Tsingtao move up-market.
“China’s beer market is going through a reinvention right now as younger consumers shift towards more niche brands. Tsingdao is kind of an outlier because it has mass scale and volume but is also looked upon as being more premium than other domestic beer brands.”…
It comes as a handful of Chinese conglomerates including Fosun have turned their sights back on the domestic market amid a crackdown by Beijing on eye-catching overseas ventures.
Cavender said the deal would likely go down well with Chinese regulators because it was “an example of Fosun coming home and investing in a Chinese asset” rather than overseas.
“Tsingtao is both a leading brewery in China, and a leading Chinese brand that has successfully penetrated the international markets,” Fosun Chairman Guo Guangchang said in the company’s statement.
Fosun’s business model and global reach would help grow Tsingtao’s brand and tap into Chinese demand for more premium beers, he added.
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