The rise of domestic consumption is the bedrock of the investment case for China, and many investors believe Western multinationals are the best way to tap these new consumers.
We have sympathy with this view and recognise that some Western firms – such as Yum! Brands, which owns fast food chain KFC – are well positioned to do this.
Yet, we believe investors are missing a huge opportunity to tap in to local companies that really understand local (often regional) consumers’ tastes.
These strong brands often have long-established, deep distribution networks that give them an enduring competitive advantage over foreign [...]
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