4th May 2012
It increasingly appears that our financial future is intimately related to one country – China.
The latest to fall into Chinese hands is Weetabix, the breakfast cereal produced in Britain since 1932. We all know it, and many of us love it. It has effectively been sold to an arm of the Chinese state, as China again flexes its financial muscles and adds to its dynamic growth strategy.
Bright Foods, which is run by the council responsible for the city of Shanghai, is paying £720million for a 60% controlling stake in the company.
The cereal manufacturer, based in Northamptonshire, was family owned until 2004 when it was bought by a Texan private equity firm, Lion Capital. But now the business is effectively being nationalised – not by the British government, but by the Chinese.
Chairman Zongnan Wang said: "With Bright Food's strong resources and our expertise in both the Chinese and broader international markets, we are excellently placed to develop the Weetabix business."
Commenting on this report Stuart Lorimer says: "Britain is now up for grabs and nothing is sacred…Your only requirement to buying these prized goods is you must be a non Britain. China most welcome and Russian Rubles are looking good for the Bank nof England.Yes you can now take what ever you want in this the biggest sale in Britain today."
Currently, the Chinese do not have Western-style breakfast cereals and are more likely to eat savoury rice dishes or deep fried dough – but the nation's wealth is bringing a change in diet.
In addition, the Chinese are growing fans of luxury goods. It is estimated that one-third of designer clothing sold on London's Bond Street goes to Chinese tourists, which is why stores such as Harrods employ staff who speak fluent Mandarin.
Something similar is happening with mobile phones. Not only are there hundreds of millions of consumers in China who have never owned them before, but they now want and can afford the latest, costliest models.
A comment on this report reads: "This is why our kids should be learning Mandarin in schools, not pointless French or German. The West has had its day. We're slowly collapsing under our democratically demanded debt fuelled spending of the last 50 years. It's time to pay the piper."
Investors in UK companies from Mulberry to Burberry owe much of their recent new found wealth to China's love of prestige marques – and it seems China loves a British brand.
An investigation by the The Daily Telegraph found that it's not just handbags that the Chinese are snapping up. It's the names of the brands themselves. It has emerged that High Street names are being registered by Chinese individuals in their droves. Stalwarts of the retail industry such as Sainsbury's and John Lewis have had their names registered in China.
What about other recent acquisitions, aside from luxury? Well, there are utility companies. The China Investment Corporation recently bought a 9% stake in Thames Water.
There are also car manufacturers. Among the most high-profile example so far has been the Shanghai Automotive Industry Corporation's takeover of the remnants of MG Rover, which led to most production being moved to China.
So what next? This remains to be seen, but last week it emerged that the British sports car firm Lotus is under threat of being sold to China, putting 1,400 UK jobs at risk.
If these companies China is bagging can be boosted through international exposure, however, this might be good news for investors seeking stock with decent earning potential.
Meanwhile, other nations have been more protective of their assets. The US signalled in 2005 that it would not tolerate China buying major companies when the government scuppered an attempted takeover of energy firm Unocal by the Chinese National Offshore Oil Corporation. France and Germany have also imposed barriers to foreign takeovers of domestic firms.
More on Mindful Money:
To receive our free daily newsletter sign up here.