what we think

By Robin Tabbers and Fabian Knopf

Background

In September 2025, a U.S.-listed company in the automotive aftermarket sector acquired the assets of its exclusive Chinese distributor. The acquired business generates approximately USD 45–50 million in annual revenue, marking a notable example of foreign participation in China's mergers and acquisitions (M&A) market. Find the press release here.

Market Context

Despite headlines emphasizing geopolitical tensions and a slowing global economy, foreign investors continue to expand in China. Many are pursuing long-term strategies driven by the country's growth potential, stable regulatory environment, and consistent policy planning. Acquisitions of existing partners or distributors are increasingly common as foreign companies look to strengthen control over revenue streams, secure distribution networks, and consolidate market presence.

Legal and Strategic Considerations

• Asset Acquisitions as an Entry Model: Asset acquisitions remain a preferred route for foreign investors in China, offering greater flexibility in structuring deals and managing risks compared to equity acquisitions.
• Distribution Integration: Acquiring established distributors allows international brands to internalize existing sales channels, ensuring continuity while mitigating risks associated with third-party intermediaries.
• Regulatory Environment: China's regulatory framework for foreign investment in distribution and related sectors remains open, supporting both greenfield investments and acquisitions.

Significance

This transaction illustrates two broader trends:

1. Resilience of Foreign Investment – While global sentiment may suggest caution, actual practice shows steady inflows of foreign capital into China, particularly in sectors with strong consumer demand.
2. Shift Toward Vertical Integration – Rather than relying solely on local partners, more foreign companies are acquiring downstream assets to secure distribution and improve operational efficiency.

Conclusion

The case reflects the continuing evolution of China's M&A landscape, where asset acquisitions and vertical integration strategies are gaining traction among foreign investors. It highlights both the opportunities and the strategic rationale behind recent deals, offering practical lessons for companies evaluating market entry or expansion in China.

R&P's corporate/M&A teams support clients across a broad range of industrial sectors with expansion in China. For more information or specific inquiries regarding the foreign acquisition, please contact [email protected] or your trusted contact at R&P.