| Apr 2006
Mergers and Acquisitions ("M&A") is transforming China's once closed retail sector. Deal activity has surged over the past two years as consolidation of the young modern retail trade has begun. The familiar global trend of rapid chain formation to achieve stronger buying power over suppliers has been established, and M&A is the tool by which retailers are rapidly linking once fragmented regional markets. This irreversible trend provides a multitude of investment opportunities for multinational and domestic corporate and private equity investors. Domestic players are rapidly building scale in a competitive land-grab to acquire the best local assets to form national chains, and the thirst for capital this creates is generating opportunities for private equity investors and foreign corporates. Multinational retailers now enjoy unprecedented freedom to operate but those who entered during the period when the industry was heavily regulated have legacy issues to deal with such as buying out Chinese partners and integrating operations. New entrants have the option to make outright acquisitions of existing retailers or establish their own domestic sales network. In this report, we take a closer look at those retail categories where M&A activity is most active, and examine the opportunities for investors.
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