China's New M&A Playbook

The strategy shift is exemplified by Fosun Fashion Group, which rebranded as Lanvin Group after acquiring the French couture house in 2018. The group now controls a portfolio of Western luxury brands including Italian shoemaker Sergio Rossi, Austrian brand Wolford, American womenswear label St. John Knits, and Italian tailor Caruso. This hands-on approach contrasts with the debt-fueled acquisition spree of textile giant Shandong Ruyi, which aimed to build the "LVMH of China." After acquiring brands like SMCP (Sandro, Maje), Bally, and The Lycra Company, Ruyi faced severe financial distress, with several of its acquired brands filing for bankruptcy or being lost to creditors. Now, a new wave of Chinese beauty firms is targeting overseas growth as their domestic market cools. Companies like Proya Cosmetics, S'Young, and Ushopal are actively acquiring or investing in established Western brands to gain instant access to heritage, retail networks, and credibility. S'Young has bought into France's Evidens de Beauté and US luxury skincare brand ReVive, while Ushopal has taken stakes in Juliette Has a Gun and ARgENTUM. The goal is deep integration, leveraging the new owners' capital and expertise in the Chinese market—the world's largest for luxury goods—to revitalize the acquired brands. After its acquisition by Fosun in 2018, the Lanvin brand saw its global revenue grow 103% year-over-year in 2021, with a 298% increase in North America and a 122% increase in Greater China. Investors are displaying a more selective mindset, targeting niche categories with high growth potential. Fragrance and haircare have become M&A hotspots, with Chinese groups like Joy Group acquiring the China operations for René Furterer and Italian brand Foltène. This focus on prestige positioning and scientific credibility marks a shift from funding growth at any cost. To fund these ambitions, companies are tapping public markets. Lanvin Group, for instance, pursued a listing on the New York Stock Exchange through a SPAC deal, aiming to raise capital for further acquisitions and to grow its existing brands in Asia and North America. This strategy is not limited to fashion and beauty. Since 2019, over 20 acquisitions of foreign consumer brands by Chinese firms have occurred. Anta Group, a sportswear company, successfully acquired and grew brands like FILA, which contributed approximately 40% of the group's total revenue in 2023. Ultimately, the objective for companies like Proya is to emulate the global dominance of giants like L'Oréal and Estée Lauder. By acquiring brands with history and technology, these Chinese conglomerates aim to build global portfolios and redefine themselves as international brand powerhouses, not just participants in the Chinese market.