(China Daily)
Li said restaurant chains need a large amount of capital at infancy. But there are two kinds of capitals. One, capital brought in by investors with a deep understanding of the sector who bet on long-term growth. Two, capital of investors who seek to cash out quickly.
Owing to intense competition in meat production, cross-sector capital was injected, which hurt the long-term growth of the sector, he said.
Such turn of events is not limited to the restaurant business.
In the fizzy drinks sector, Beibingyang (meaning: Arctic Ocean) orange soda was a time-honored brand, launched in 1936 from an old ice-making factory in Beijing.
Beibingyang dominated the Chinese market in the 1980s before it became a joint venture with US-based PepsiCo Inc in 1994. Pepsi halted production of Beibingyang soda that disappeared from the shelves of Chinese stores.
But, in 2011, Beibingyang dissolved its partnership with Pepsi and revived its best-selling orange soda.
Guo Honglei, assistant to the general manager of Beibingyang, said, "We are doing well now. Many stores cannot keep enough bottles in stock though."
Thankfully, not all takeovers by foreign investors destroy local brands.
In 1994, global fast moving consumer goods giant Unilever took over management of leading domestic toothpaste producer Zhong Hua.
Founded in 1954 in Shanghai, Zhong Hua had been a famous local brand. Unilever became a shareholder with an investment of $18 million.
Since 2001, the Anglo-Dutch company poured in cash to market the Zhong Hua brand. The toothpaste contributed an average annual sales revenue of 1 billion yuan to Unilever in recent years, according to Linkshop, a leading Chinese retailing information provider.
