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White Rabbit run not over yet

By Zhou Yan (China Daily)
Updated: 2009-07-02 08:04

Guanshengyuan plans to list on the stock exchanges in two to three years, said company chairman Wen Mao. [CFP]

Guanshengyuan, a Shanghai candy maker, has found a white knight to save its well-loved White Rabbit creamy candy from sliding into oblivion like so many other once-famous Chinese brands.

Retaining its original flavor and wrapping, this candy delight of past generations of Chinese ranging from Harbin to Guangzhou, has lost much of its appeal to the kids of today, who are now spoilt for choice.

Though showing its age, there is still plenty of life left in the brand, and that's exactly what has attracted the attention of CITIC Capital, a private equity unit of financial conglomerate CITIC Group.

Early last year, CITIC Capital bought a 45 percent stake in Guanshengyuan from Shanghai Yimin No 1 Foods, which is owned by Bright Food (Group) and Shanghai Media & Entertainment Group, both of which are controlled by the Shanghai municipal government.

It was one of the largest private equity investments in the Chinese food processing industry.

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The newly restructured Guanshengyuan debuted at a ceremony last Friday attended by more than 200 guests, including Shanghai vice-mayor Hu Yanzhao and top executives of the related companies.

Wang Zongnan, chairman of Bright Food, said at the ceremony that Guanshengyuan could not only benefit from the capital injection from CITIC, but also from its considerable market influence and resources.

The team-up with CITIC therefore could help Guanshengyuan strengthen its marketing operations and promote its branding awareness, he said.

During the same occasion, Wen Mao, Guanshengyuan's chairman, said that the new company was seeking to obtain a stock exchange listing in two to three years.

The major products, including, of course, White Rabbit candies, manufactured by Guanshengyuan would not be affected by the transaction.

"CITIC Capital's acquisition move was a capital operation, and it will have higher returns through floating shares of Guanshengyuan," Chen Shuwei, vice-president of Beijing Orient Agribusiness Consultant Ltd, said.

A public listing, obviously, can help promote the image of the company and its brands among investors as well as consumers, analysts said.

Chen said Guanshengyuan might still show good growth given the company's established reputation across the country.

Guanshengyuan, established in 1915, had annual sales of 6 billion yuan, according to the company's website.

White Rabbit candy, one of the confectionery firm's key products, has long been a household name among the Chinese, and started becoming popular in 1972 when it was presented as a State gift to then US president Richard Nixon.

White Rabbit is exported to 45 countries and regions with accumulated sales of $160 million.

"Guanshengyuan probably will seek listings in Shanghai or Hong Kong, given the company's reputation within China," Chen said, adding that gaining international reputation was not the company's key priority at present.