The auction for ParknShop, Hong Kong’s largest supermarket by market share, is gathering pace.
Although it may not be the biggest deal to hit the region this year, it has stirred debate in the city on the role of tycoons in the city, not to mention the origin and safety of food.
ParknShop is owned by Hutchison Whampoa, a conglomerate controlled by Asia’s richest man Li Ka-shing, and it enjoys a near duopoly with Wellcome, which is run by British group Jardine Matheson Holdings.
The auction comes amid political and public pressure on tycoons, a new anti-competition law and the entry of mainland-Chinese state-owned enterprises to curb the sway of Hong Kong’s powerful conglomerates.
China Resources Enterprise said it has bid for ParknShop and may partner with the UK’s Tesco. Other suitors are Japan’s Aeon and Australia’s Woolworths said people familiar with the matter.
CRE owns Hong Kong's super market chain Vanguard.
Meanwhile, Private equity firms KKR and TPG had bid but were cut because their bids were too low, a person familiar with the matter said on Wednesday.
As an outcome draws closer, FinanceAsia asked a small sample of the supermarket’s customers which company they thought would make the best owners, and whether tycoons hold too much sway over the city.
Overall, most appeared concerned by a CRE bid due to concerns over food safety associated with mainland Chinese companies, with some claiming they were willing to pay a premium to shop in foreign supermarkets should CRE win the bid.
“I favour [an] Australian company because I associated the country with variety of fresh food. I will definitely not want any Chinese companies to take over ParknShop,” said Ray Kam, recruitment consultant, in his 20s.
Francesca Gao, a computer programmer cited food safety as the most important factor, and she preferred an Australian victory because “it sounds safe.”
However, a Chinese winner did meet with some approval.
Darren Wen, 24, a local Hongkonger who lived in Shenzhen before, is familiar with China Resources‘s mainland supermarket chain. “I think [a] merging with China Resources will maintain ParknShop’s brand image as a low margin supermarket for the general public, as China Resources’ supermarket chain is renowned for its competitive price in China. I certainly do not want western companies to rebrand ParknShop as some high end supermarket.”
When asked about if he is concerned about the food safety standards of Chinese companies, he added “People are influenced by the media too much without any first-hand experiences themselves.”
Chow Wei, a pharmacist, claimed that he has a passion for Chinese food, “I care about the product variety that a supermarket can offer, if China Resources can bring more authentic Chinese food, I would not mind that it wins the bid.”
David Hsu, a 22 years old student, said he would prefer Aeon due to the high standard services provided by Japanese companies. “However, I am worried about whether there will be volatility in food prices once the deal is sealed, as a student, practically speaking, put aside my personal preference, I would want someone who can keep the food on the shelves cheap to take over ParknShop.”
Meanwhile, there were concerns about the level of influence wielded by Hong Kong’s tycoons.
“In recent years, Li Ka-shing has been diversifying his investments into other countries because Hong Kong people are becoming more vocal about their dissatisfaction towards monopolist power in the marketplace,” said Wen.
Hsu, meanwhile, said he was concerned about the power associated with the wealth of Hong Kong tycoons. “Me and my friends were talking about how unbelievable it is that Li Ka-shing even owns so much of England now!” he said.
However, the feeling does not appear to be universal.
“I am not particularly concerned about wealth of Hong Kong tycoons as long they do not abuse the power comes with it,” said a lady who declined to be named. “If Li Ka-shing has not been manipulating food prices, nor will ParknShop’s next owner. I do not really mind at all. Even if there is not Li Ka-shing, there will always be the next richest man.”
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