Ailing HK brands kneel to China capitalEditorial | Mary Ma 19 May 2020
The news came on Friday evening that a Shenzhen-based property developer offered to acquire department store Sincere - once a local retail legend - for as little as HK$500 million.
It was the fourth bid made by mainland companies in the past three months for brands that are uniquely Hong Kong. Clearly, being associated with Hong Kong still carries a certain cachet despite the fact that nearly all products are made in the mainland these days.
Sincere has experienced hard times during the rise of the new economy. When did you last visit a Sincere store to buy a pair of leather shoes or sports trainers? To be honest, I can't remember because, for me, it was many years ago.
Nonetheless, the name is embedded in our memory - an icon of the good old days.
It's a pity to see an old brand fall, but it is part of the capitalist process in which brands are recycled. Some continue on even more successfully, others totally vanish.
Though this is a natural process, it's interesting to notice the increased momentum right now.
Just a few hours before the offer to take over Sincere was announced on Friday, it was disclosed that another mainland company was in the course of acquiring a controlling stake in Hong Kong fashion chain Bossini - again, once a popular local household name.
Viva China, founded by retired gymnastic star Li Ning, secured control of Bossini for just over HK$46 million. This was truly a knockdown price - more than 70 percent lower than the level at which Bossini was last traded the day before.
Since February, capital from the mainland has stepped up snapping up Hong Kong businesses listed on the SAR stock market.
The control of cosmetic chain Bonjour changed hands for less than HK$160 million making its vice chairman - a Chinese People's Political Consultative Conference representative of the Inner Mongolian region - the group's biggest shareholder.
Then on May 4, Guangdong's Chu Kong Shipping Enterprises bought a controlling stake in New World First Ferry Services for slightly more than HK$230 million.
Chinese companies buying into Hong Kong firms is nothing new. However, they now seem interested more in listed vehicles involving small capital than in large assets involving huge chunks of money as in the past.
Remember Beijing's call for Chinese companies to play a leading role in shaping the SAR's economy and its labor market at the height of the anti-government protests last year?
It may be a coincidence. Yet, the severe economic recession hitting many Hong Kong entrepreneurs right now has created a golden opportunity for mainland capital to snap up local assets at bargain prices.
As governments in the West are putting up hurdles to make it difficult for Chinese firms to buy important assets during the pandemic crisis, Hong Kong - given its special trade status - offers an alternative.
A new tide of acquisitions has likely just begun. Will old Hong Kong brands be recycled to hit the pinnacle again?
It's worth monitoring.