During the past few years, China’s food industry has undergone rapid transformation. Economic growth has created new food safety and quality challenges for both industry and regulators. On 11 April in Beijing, PwC China hosted the “Food Supply and Integrity Services Investment Opportunities Seminar”, hosting investors and industry leaders to discuss the challenges of food safety, quality control, risk forecasting, supply chain management, growth strategy and investment.
During the meeting, Ms. Wenjing Cao, Director of PwC China’s Food Supply and Integrity Services team, said that the overall food industry environment remains relatively positive, but many sub-segments and individual companies are getting into a growing range of products and channels. As a result, each company faces a unique set of food safety food safety risks, creating challenges for investors.
Ms. Cao said that consumer demands for better quality and more variety, as well as a wave of overseas acquisitions, are creating opportunities for investors. In addition, investors should consider companies with promising growth potential but weak management. By upgrading management, investors can reap outsized returns.
Next, Mr. Jing Wang and Ms. Ke Wu, PwC China Partners, discussed the legal mechanisms for protecting buyers and sellers in food industry M & A transactions, as well as the key financial issues for food industry investments.
Being different from other industries, besides following conventional financial and legal due diligence, investors should pay attention to food safety management and be responsible for food safety due diligence. Therefore, senior manager Yanming Wang shared her experience about food safety risk prevention. She indicated that food safety due diligence is not only based on the standard of product, but also operates on the basis of management system standards. These are two necessary conditions to ensure product risks and operational risks are within acceptable limits.
Finally, PwC Food Supply and Integrity Services Senior Manager, Mr. Toby Lin, shared PwC’s experience helping food companies with post-acquisition integration. He mentioned that 53% of M&A transactions fail during the integration phase and that post-acquisition management is a key to success. Executives need to develop a management style that is well suited to their group and its new mix of subsidiaries.