China’s latest wave of mergers and acquisitions has a retro feel, with big tech groups scooping up shops and other retail assets.
China groups have made 141 ecommerce and retail acquisitions this year, according to Dealogic, while a posse of youthful shopping apps are poised for listings and multibillion-dollar valuations.
Analysts and investors say two factors are driving the trend.
The first is the rise of the Chinese shopper — the fruit of efforts to rebalance the economy from exports to consumption. Shopping culture is spreading from rich urban areas to rural regions and thriftier consumers. Consumption accounted for 77.8 per cent of economic growth in the first quarter.
On the supply side, China’s big tech groups are embracing retail in large part as a driver for their payments arms. Tencent is going head to head with Jack Ma’s Alibaba, which helped unleash China’s retail revolution when it launched its Taobao app in 2003.
“It’s a red-hot topic for [Tencent],” said Matthew Brennan, co-founder of China Channel consultancy.