In recent times, many outstanding consumer companies—including several portfolio companies of GenBridge Capital—have successfully navigated a challenging environment. Companies like Harvest and Guoquan have also made their way to the capital markets, entering new phases of development. On the other hand, as a professional consumer-focused investment firm, GenBridge has been proactively exploring whether, beyond IPOs, there are other viable capital realization paths for consumer companies in this new environment.
Recently, a number of major M&A deals have taken place in consumer sector—such as the acquisition of Vinda International by Singapore's Royal Golden Eagle (RGE) Group, and Anta’s acquisition of MAIA ACTIVE. These deals have drawn increasing attention across consumer sector.
GenBridge Capital positions itself as a “professional growth-stage investor in the consumer sector,” with a portfolio of over 20 leading partner companies built around two core themes: “new generation national brands” and “new generation national chains.” Through ongoing dialogue with entrepreneurs, we’ve observed that in the multi-brand, omnichannel phase of development, strategic mergers and acquisitions can be a powerful lever for continued growth.
Recently, GenBridge held a conversation with local M&A fund Firstlight Capital. We came to a shared belief: now is a timely moment to discuss our thinking around consumer-sector M&A.
Why is now a window of opportunity for industrial-style consumer M&A?
Ongoing changes in the external environment have made both business growth and capital market exits more challenging. After three years of pandemic impact, China’s economy is gradually recovering, but the rebound in consumer spending may take longer. On one hand, consumer expectations about the future have shifted—many are actively deleveraging. Experience from abroad suggests that once households enter a deleveraging cycle, it can persist for a long time without strong policy stimulus. On the other hand, China’s economic growth has slowed, and growth in disposable income is unlikely to return to pre-pandemic levels. Recent consumer data shows that while consumers are returning, their spending power has not fully recovered.
At the same time, capital markets are undergoing cyclical adjustment. Domestic IPO pathways have tightened, and overseas markets remain sluggish. The consumer sector was among the first to enter this adjustment phase, and it has been relatively intense. The primary market is undergoing revaluation, and the secondary market continues to cool on consumer stocks.
In this more uncertain environment, entrepreneurs and investors alike are adjusting both expectations and return strategies. For entrepreneurs, the era of organic-growth-driven windfalls is over. Future growth will demand greater overall capability. In our conversations with founders, it’s clear that they’re shifting away from chasing growth in absolute terms, and instead prioritizing growth quality. For example, during the pandemic, GenBridge’s core post-investment strategy was centered on managing cash flow—collaborating with founders to shut down or restructure underperforming businesses, and strictly controlling expenses and cash outlays. These efforts helped our partners build strong cash reserves and capitalize on opportunities during the rebound, achieving higher-quality growth.
For investors, in light of a more tightly regulated environment, IPO exit expectations have become more grounded in reality. Both in deploying new capital and exiting existing investments, investors are seeking new tools and strategies. Looking at mature markets like the U.S., about 70% of consumer investment exits occur via M&A. This is partly because the consumer sector is inherently complex—very few companies manage to lead in all areas such as product, channel, supply chain, and branding. However, those that establish differentiated advantages in just a few of these domains are still highly valuable integration targets. At the same time, leading companies need external M&A to achieve multi-brand, multi-category, and cross-regional development goals—fueling long-term sustainable growth.
Changes in the broader environment and in expectations are prompting a more serious view of M&A’s strategic importance to both corporate growth and equity investment. For many entrepreneurs and investors, M&A will become a critical instrument for continued success in the consumer sector.
First, consumer is one of the few sectors that can truly weather economic cycles—and thus deserves long-term commitment. Take Japan, for example: even during its “lost three decades,” a number of outstanding consumer companies emerged, including familiar names such as 7-Eleven, Uniqlo, Nitori, discount store Don Quijote, and restaurant group Zensho.
For companies navigating downturns, capturing opportunities through external M&A—alongside organic growth—has proven an effective path to industry leadership. For instance, Japan’s largest food service company Zensho (parent companies of Sukiya) acquired multiple listed restaurant companies between 2000 and 2014, including COCO’s (family dining), Nakau (fast Japanese cuisine), and Takarajima (low-cost grilled meat). These acquisitions helped shape its MMD (Mass Merchandising Dining) strategy. Zensho eventually surpassed McDonald’s Japan to become the country’s leading restaurant group.
Second, the characteristics of the consumer sector itself create abundant M&A opportunities. Strong consumer companies tend to have steady and robust cash flows. For buyers, this means ample cash reserves to “bottom-fish” quality assets. For example, in 2009, Anta spent RMB 332 million to acquire the China business of Italian sports brand FILA, successfully scaling it into a RMB 20 billion brand. Anta subsequently acquired Descente China, KOLON SPORT, and Amer Sports—and most recently, shifted its attention to the domestic market, acquiring a 75.13% stake in rising female sportswear brand MAIA ACTIVE. For targets, strong internal cash flow significantly reduces deal risk and lays a solid foundation for transaction execution and post-merger integration.
Finally, the consumer industry is undergoing a shift from a seller’s market to a buyer’s market. With intensifying competition and clear generational transitions, this inevitably accelerates mergers and acquisitions, as well as industrial upgrades. Amid capital market adjustments, deal opportunities are increasing, and transaction structures are becoming more flexible. For buyers with strong purchasing power, this presents a favorable window of opportunity. Leading companies that can leverage M&A to build a “second growth curve” or enhance critical capabilities may be well-positioned to become absolute leaders in their industries.
How will industrial-style consumer M&A unfold?
Reinforcement at the channel and supply chain ends will form the core logic of industrial-style consumer M&A. On the channel side, both online and offline landscapes are undergoing substantial transformation. Online channels have evolved beyond traditional e-commerce platforms like JD and Tmall to include new traffic sources such as Douyin and Pinduoduo, driven by a shift from a “searching for goods” model to a “goods finding people” logic. Offline channels, especially after three years of pandemic impact, have also seen seismic shifts. Traditional KA (Key Account) channels and multi-tier distribution systems are being disrupted by a new generation of chain formats, forcing brands and distributors that rely on these traditional models to adapt their business models.
In broader distribution channels that represent China’s mass market, legacy giants remain firmly entrenched. New entrants must commit long-term investments and, in many cases, pay a “tuition” to gain access. Each channel typically reflects distinct consumer profiles and demands, which requires companies to flexibly adapt their product strategies and pricing systems. Supporting these adaptations is the need for a robust supply chain. Companies must upgrade supply chain investments to enhance product quality and user experience. At the same time, they must improve efficiency through restructuring the value chain—lowering product prices while improving performance—to deliver better value-for-money. This is a critical challenge for all consumer enterprises.
Facing these generational changes in channels and supply chains, both legacy and emerging companies are eager to utilize M&A as a tool for upgrading capabilities. This represents a structural opportunity in the consumer industry.
Legacy consumer companies have scale advantages and industry influence, often backed by strong capital tools such as IPO proceeds. During industry transition phases, they aim to upgrade capabilities and consolidate competitive advantages while also facing pressure from new entrants and formats.
For example, GenBridge Capital’s long-term strategic partner, Singapore’s RGE Group, established upstream advantages in raw materials such as pulp and palm oil and committed to a vertically integrated “plantation–pulp–paper” strategy. Recently, recognizing structural opportunities in China’s tissue market, RGE partnered with GenBridge to invest in emerging tissue and hygiene brand Zhihu, strategically acquired C&S, the leader in moisturizing tissues, and announced a proposed acquisition of Vinda International for HKD 26.1 billion. These moves demonstrate RGE’s determination and capability to expand its competitive edge through external M&A.
Next-generation consumer companies, on the other hand, often benefit from asset-light models and agile execution. They’ve already gained early advantages in emerging formats and exhibit strong growth potential. At this stage, they can consider using M&A to access key resources and upgrade core capabilities. For example, fast fashion e-commerce company SHEIN recently acquired British fast fashion brand Missguided and took a one-third stake in U.S. apparel operator SPARC Group, parent of Forever 21. These deals help fill brand asset gaps while leveraging SHEIN’s supply chain strength. Moreover, next-gen entrepreneurs are typically younger, with more open cultures, flatter organizations, and better experience working with capital markets. These traits increase their openness to external M&A and improve post-merger integration success rates.
A deeper driver behind successful M&A lies in organizational evolution and alignment. Take the recently announced acquisition of KUKA Home by Infore Group. While the deal was driven by multiple factors, the core question is: why Infore? Drawing from GenBridge’s prior deep research on Midea Group, we believe household appliance firms, having faced earlier and fiercer supply-side competition, were forced to evolve faster—developing business unit–driven organizations supported by decentralized authority, comprehensive budgeting, and performance accountability systems. This operational framework helped Midea grow from RMB 2 billion to RMB 350 billion over two decades and has cultivated extensive talent across industries. Following the KUKA deal, we anticipate deeper cultural and organizational synergy between the two firms.
How to identify opportunities and overcome deal challenges?
In today’s environment, industrial-style M&A places higher demands on integrators. These companies must not only have sufficient scale and purchasing power but also possess mature strategic and organizational systems. A key sign of maturity is whether the company has developed an independent second growth curve, proving its ability to extend core competencies into new areas. Furthermore, integration success depends on corporate culture compatibility, organizational model adaptability, and the ability to manage conflicts and synergy between legacy and new businesses, and between internal and external teams.
Over 40 years of reform, China has produced a generation of dominant consumer leaders with scale advantages. Some of these firms have weathered multiple cycles, gradually evolving platform-level integration capabilities. For example, Anta Group has acquired and integrated global and domestic brands like FILA China, Descente China, Kolon Sport, and Amer Sports, building robust transaction and integration experience—perhaps signaling the maturing of local consumer M&A capability.
On the target side, differentiation matters more than sheer scale or financials. For instance, RGE’s strategic acquisition of C&S, China’s top moisturizing tissue brand, is a textbook case of a niche category leader combining with an upstream supply chain giant.
At the transaction level, one of the most practical barriers is the valuation gap between buyers and sellers. On one hand, many listed consumer companies acting as acquirers currently have relatively low market capitalizations. From both shareholder and regulatory perspectives, this limits their ability to justify high-premium outbound investments. On the other hand, many potential acquisition targets were previously valued at high multiples under growth-stage investment logic in the primary market, which now poses a challenge in M&A negotiations—particularly for later-stage financial investors, who may find it difficult to accept significant valuation markdowns.
Recent deals may offer new solutions to this challenge. We’ve observed cases where listed companies adopted differentiated pricing and payment structures when acquiring early-stage tech startups. For instance, the shares previously held directly by the listed company were sold at the original investment cost—reflecting a valuation close to RMB 2 billion—ensuring no book loss for the acquirer. Meanwhile, financial investors exited at a valuation of approximately RMB 1.1 billion, lower than that of later funding rounds, but received immediate cash compensation. The founding team, in turn, exchanged equity with the acquirer, aligning long-term interests.
Whether during the deal-making phase or the integration stage, institutional investors— as key participants—can provide critical support in capital, strategy, and more.
M&A funds, with strong financial firepower and extensive experience in deal execution and post-merger integration, are capable of bridging valuation and governance gaps through creative and flexible structuring, often acting as “rainmakers” for complex transactions. In certain scenarios, these funds can also take an active lead in driving broader industry consolidation.
As a dedicated consumer-sector investor, GenBridge Capital has accumulated deep industry insights and research capabilities through years of hands-on investment. We support next-generation leading enterprises with comprehensive strategic, operational, and capital guidance, helping them pursue external M&A to achieve further growth. At the same time, leveraging our in-depth understanding of next-gen companies and their unique capabilities, GenBridge is also eager to collaborate with mature consolidators in exploring integration and partnership opportunities around new formats and emerging players. This dual positioning reflects GenBridge’s distinct strength as a consumer-sector specialist, and our broader mission as a “Generation Bridge”, connecting different waves of entrepreneurs across generations.