Key Points:
- M&A activity in China is expected to increase in 2024, despite a decline in deal volume in 2023.
- China remains a top market for venture capital (VC) funding activity, with a high deal volume and value.
In 2023, global M&A activity saw a decrease in deal volume, reaching a decade low, but it is expected to pick up again in 2024. China experienced a smaller decline in deal volume compared to its peers such as the U.S., the U.K., and India. China is still a top market for VC funding activity, second only to the U.S., in terms of deal volume and value. However, there are factors that are dampening investor interest in China, including restrictions on capital flow, slow economic recovery, high U.S. interest rates, sluggish performance of Chinese equities on the U.S. stock exchange, and geopolitical trade barriers.
Investors are still looking to offload projects that suffered from the collapse of the consumer goods valuation bubble in 2020 and 2021. Despite this, there is still potential for dealmaking in China in 2024 due to Chinese consumers’ appetite for newness. Recent investments in Chinese brands and supply chain operations show investor interest in the country’s consumption-driven economy revival. For example, Adrian Cheng’s investment in 1017 Alyx 9SM and Anta’s acquisition of Chinese sportswear brand Maia Active.
Investment in China’s fashion and lifestyle space is expected to be driven by the desire for authentic self-expression and unique experiences. Chinese consumers are seeking products and brands that align with their values and deliver a strong lifestyle statement. This trend is seen in the rise of “dopamine dressing” and the expectation for products to be more substantial and inspiring. Local beauty conglomerates are also seeking global targets to meet the needs of China’s sophisticated consumer base.
