A recent ad for British department store House of Fraser, which is set to be acquired by Chinese company Sanpower. (House of Fraser)
From real estate to multinational companies, Chinese investors have been making big-ticket acquisitions abroad at a rapidly growing pace. The latest major buyout, the April 4 announcement that Chinese conglomerate Sanpower has agreed to buy a majority stake in 165-year old British department store chain House of Fraser, shows that luxury and retail with British heritage are prime investments for Chinese buyers looking to both expand in China and bank off an influx of Chinese tourists to the UK.
Owned by multimillionaire Yuan Yafei, Sanpower is buying an 89 percent stake in House of Fraser, which sells a combination of mid-range and higher-end consumer fashion brands such as Lacoste, Hugo Boss, and MaxMara. Although the deal will be Sanpower’s first investment in UK retail, the company owns the Nanjing Xinjiekou department store in China.
The new acquisition shows a strong push toward luxury, fashion, and retail in a veritable “shopping spree” by Chinese companies looking to take over British brands in recent years. Chinese conglomerates have made British acquisitions across a variety of sectors, buying everything from Weetabix cereal to Thames Water. British fashion brands have especially caught the eye of Chinese companies. In 2012, Hong Kong-based YGM trading purchased ailing British clothing brand Aquascutum. Meanwhile, in the same year, Chinese menswear company Trinity bought Savile Row tailor shop Gieves & Hawkes. It’s not just clothing retailers catching the eye of luxury-minded Chinese investors: in June 2013, Dalian Wanda acquired iconic British yacht maker Sunseeker, known for its appearance in James Bond films.
Acquisitions of foreign luxury brands provide Chinese companies with a shortcut to long-standing brand heritage that is more difficult to achieve with newer Chinese brands. British heritage has been a major selling point in China for luxury brands such as Burberry and Jaguar, and has helped to boost UK-associated materials such as tweed and wool.
Yuan Yanfei signs the deal with House of Fraser chairman Don McCarthy. (Sina)
These acquisitions will both help British brands with their China expansion and benefit home-turf sales to the ballooning number of Chinese tourists making their way to the UK every year. According to a statement by House of Fraser CEO John King, the Sanpower acquisition will accomplish both for the department store. “For us, we see this acquisition as an opportunity. We want to bring House of Fraser to China and build a bridge to the world. So when Chinese who know this brand come to UK to sightsee or study, they will say 'Oh, I know this brand!'"
Yuan agrees, stating, “The UK market is growing slowly and is limited. I’ve recommended to them to enter China; I think it’s a great name. We’ve already started the development and hope to open stores across the country. This is because the store’s stockholders and managers have a great deal of confidence in us.”
In the future, this growing contingent of Chinese-owned, British brands may have more Chinese competition to watch out for, however. In 2012, Chinese clothing label Bosideng chose London to make its foray into the international market when it opened up a 1,600-square-meter store in the West End. In addition, Dalian Wanda may be banking on British heritage for its international yacht venture, but not for its hotels. The company plans to open a Chinese-branded luxury hotel on London’s Nine Elms regeneration site, which will likely have an extra edge in providing special amenities to Chinese tourists.