Investment And M&A

China's consumer sector entered a period of transition in 2025, marked by shifting consumption patterns, evolving regulatory expectations, and ongoing portfolio realignments across the industry. Against this backdrop, market participants have been exploring new growth areas and adapting their M&A strategies to navigate changing market conditions. While overall liquidity remained tight and some investors were cautious, the sector has continued to offer selective opportunities, particularly in segments aligned with long‑term consumption trends.

Policies & regulations

The Action Plan for Stabilizing Foreign Investment released in February 2025 introduced several measures to facilitate M&A transactions for foreign investors, including the plan to revise the rules governing foreign acquisitions of domestic enterprises, and to further streamline procedures and lower thresholds for cross-border share swaps. These initiatives are expected to make it easier and more flexible for foreign capital to participate in M&A activities within China's consumer goods sector, creating more market opportunities and collaboration space. The plan also encourages foreign investment in service consumption areas such as elderly care, healthcare, culture and tourism, sports, and vocational education, reflecting ongoing support for diversified consumer demand. These sub-sectors are expected to attract increasing interest from investors in 2026.

The Administrative Measures for M&A Loans by Commercial Banks effective on 31 December 2025 marks another development. The measures further relaxed the proportion of certain M&A loans relative to transaction value (e.g., up to 70% for loans in a transaction to obtain control), as well as extended the maturity period of such loans (e.g., up to 10 years for loans in a transaction to obtain control), while also broadening the scope of application to include minority "equity participation" M&A. These revisions are generally regarded as a positive step toward reducing financing constraints for acquiring entities, thereby supporting corporate restructuring and industrial upgrading within the consumer sector. 

Corporate portfolios and private equity

The prevailing market conditions are necessitating a rationalization of corporate portfolios. Both domestic and multinational corporations are undertaking strategic reviews that may result in spin-off or disposal of non-core or underperforming assets to enhance focus on core competencies (e.g., the recent high-profile divestitures by Starbucks and Burger King of the majority stakes in their China operations to Boyu Capital and CPE Capital respectively).

These recent deals demonstrate that private equity investors are actively assessing opportunities to acquire mature brands divested by multinational companies and positioning for long-term growth in China's consumer goods market. Their focus extends beyond acquisition to the long-term operation and value transformation of these carved-out assets, aiming to unlock new potential through brand revitalization and strategic repositioning.

On the other hand, joint ventures remain a common mechanism for market access and risk-sharing, particularly for international brands. 

Outbound investment

Fuelled by domestic competitive pressures, Chinese consumer brands are engaging in aggressive outbound strategies. This outbound momentum is observed across various sectors, including food and beverage, e-commerce, and lifestyle. For example, the rapid globalisation of popular Chinese collectible toy IPs demonstrates how Chinese brands are gaining traction among international consumers and reshaping categories traditionally dominated by multinational players.

Chinese consumer brands' expansion plans are not limited to product export but extend to establishing integrated global industrial layouts. This push aims to secure diversified supply chains and directly access high-growth international consumer bases, particularly in Southeast Asia. As Chinese enterprises scale globally and invest in international operations, their global influence within their respective sectors continues to increase, creating new competitive dynamics for established multinational players.

Capital market opportunities

The Hong Kong capital market maintains its status as an attractive and recognized venue for Chinese consumer goods companies pursuing overseas IPOs. The retail and consumer sector was one of the leading industries in Hong Kong IPO activities in 2025 (including the listing of several prominent beverages retail brands such as Mixue Bingcheng and Auntea Jenny). Proceeds secured from these IPOs are typically designated for multiple strategic objectives, including funding the company's accelerated global expansion, cross‑border brand building and international business development. This aligns with the broader outbound expansion momentum observed across the sector. 

Conclusion

Looking ahead to 2026, deal-making in China's consumer goods sector is expected to gain momentum as policy support, financing flexibility, and portfolio restructuring converge. Supported by clearer regulatory signals and stabilising market conditions, opportunities will increasingly centre on strategic acquisitions, carve-outs, and partnerships that unlock brand value and operational synergies. Companies that combine disciplined investment strategies with long-term brand positioning will be best placed to capture this next wave of growth.

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