beyondbrics

Not content with buying Volvo and large chunks of Africa, China Inc may be shifting its sights from mines, oilfields and clapped-out auto companies to taking minority stakes in famous global brands.

Last weekend’s deal which saw Fosun, one of China’s largest non-state owned conglomerates, take a 7 per cent stake in Club Med, the French travel group, could be a sign of the future. China has kept the global luxury market alive throughout the economic crisis: it only makes sense that Chinese corporates now want a bigger piece of the profits.

It’s hard to know what might be next: would-be Chinese buyers keep their cards close to the chest and not everything they might want will be for sale. But if the preferences of Chinese shoppers are any guide, then taking a chunk of practically anything from Armani to Zara might be in their sights.

“This is more exciting than Geely buying Volvo,” says Shaun Rein of China Market Research Group in Shanghai, referring to the recent sale by Ford of the Swedish automaker to the parent company of Geely, the Chinese private car company. “This shows the maturation of Chinese companies, they are not just trying to control everything, or just buy a mine: 2010 is the year when they will start buying brands.”

Andre Loesekrug-Pietri, CEO of A Capital Asia, Fosun’s financial advisor and co-investor in the Club Med deal, speaks of a “new model” of Chinese outbound investment, where the Chinese investor makes a minority investment, is “the key to open a Chinese door” – in this case, the door to the Chinese market for luxury travel. “Chinese outbound investment is seen as a bit of a hot potato: maybe this will be seen as a kind of investment that is acceptable for foreign companies. It certainly has been very well received in France.”

Club Med thinks that within five years, it can fit 200,000 Chinese people through that door every year, by which time Chinese tourists will be its second largest customer base. Club Med expects 30,000 Chinese visitors to its global resorts this year.

Of course, readers over age five may be baffled by the notion that Club Med stands for luxury travel: Butlins with a dash of Desperate Housewives, more like it – after 60 years in business, every European has a Club Med cliché tucked away in his memory.

But in recent years Club Med has refocused the brand on exclusive resorts for upmarket customers – the kind of people with money to burn in China – and selling that image in China, where there are few pre-conceived notions about the brand, may not be all that hard.

Consumer surveys done by Rein’s group show that three quarters of middle and upper income Chinese plan to take one “family” trip every year, often with the grandparents. They may take more trips with the wife or the whatever, for shopping or for romance: but one trip per year is dedicated to the only child, says Rein.

According to Pietri, that is the niche Club Med aims to fill, with luxury holidays that appeal to kids – an untapped market in China where tourist activities for children are painfully scarce. With its famous “tables of 8” concept, there should be just enough room at Club Med for the new Chinese extended family: four doting grandparents, two indulgent parents and one spoiled child. Just enough room for one Club Med “GO” (those relentlessly cheerful Club Med staff known as Gentils Organisateurs) to make sure the family survives the holiday!