Investor sentiment is undergoing a significant shift as global supply chain risks and channel optimization take center stage. Recent geopolitical tensions between the U.S. and China, coupled with underperformance by eCommerce giants, have compelled investors to reevaluate their investment strategies. This insight comes from a report released by the Consumer investment banking team at Brown Gibbons Lang & Company (BGL).
Amid growing uncertainties in U.S.-China economic relations, investors are expressing concerns related to potential conflict and the shifting rhetoric of U.S. presidential candidates. To mitigate these risks, consumer businesses are being advised to pursue a dual-sourcing strategy or consider severing ties with Chinese suppliers entirely.
Key findings from the report include:
1. Shift towards diversification: Large U.S. retailers are now demanding that vendors develop product sourcing strategies outside of China. Sole reliance on Chinese suppliers is viewed by many investors as a significant value detractor, with some firms refusing to invest in businesses dependent on China for their products.
2. Alternative sourcing countries: It is crucial for consumer businesses to actively seek meaningful alternatives to China, considering the current challenges in the supply chain. Identifying countries with established manufacturing capabilities could mitigate risks and offer valuable opportunities.
3. Impact on M&A activity: The changing investor sentiment will continue to shape M&A activity in the Consumer sector. Investments in businesses that demonstrate adaptability and resilience in the face of supply chain challenges are likely to gain favor.
Furthermore, the report highlights the enduring strength of digital commerce, which has contributed to economic growth and increased brand value. The COVID-19 pandemic has accelerated the adoption of digital platforms, but not all eCommerce investments have yielded the desired results. The report emphasizes the importance of underlying business fundamentals as a key predictor of successful investment activity.
BGL’s Branded Consumer Products investment banking team specializes in assisting consumer companies across various subsectors, particularly in eCommerce. With a focus on positioning strategies and growth-oriented projection models, they help optimize branded and managed marketplace DTC & B2B eCommerce platforms for exceptional valuations.
As a leading independent investment bank and financial advisory firm, Brown Gibbons Lang & Company (BGL) advises corporations and private equity groups on mergers and acquisitions, capital markets, financial restructurings, business valuations, and other strategic matters. BGL’s global presence and extensive expertise enable them to assist clients in over 35 countries worldwide.
Investors and consumer businesses alike should closely monitor these shifting dynamics in order to make informed investment decisions and navigate the evolving landscape of global supply chains.
Investor sentiment is currently shifting in response to global supply chain challenges, with concerns arising from geopolitical tensions and underperformance by eCommerce giants. These factors have prompted investors to reassess their investment strategies. To address the risks associated with U.S.-China economic relations and potential conflicts, consumer businesses are being advised to adopt a dual-sourcing strategy or consider severing ties with Chinese suppliers.
Key findings from a report by Brown Gibbons Lang & Company (BGL) suggest the following trends:
1. Diversification: Large U.S. retailers are increasingly demanding that vendors develop sourcing strategies outside of China. Sole reliance on Chinese suppliers is viewed as a value detractor by many investors, and some firms are reluctant to invest in businesses heavily dependent on China for their products. This shift towards diversification is aimed at reducing supply chain risks.
2. Alternative sourcing countries: Consumer businesses are urged to actively seek alternative manufacturing countries, given the challenges in the supply chain. Identifying countries with established manufacturing capabilities could help mitigate risks and provide new opportunities for sourcing.
3. Impact on M&A activity: The changing investor sentiment is likely to shape merger and acquisition (M&A) activity in the Consumer sector. Investors favor businesses that demonstrate adaptability and resilience in the face of supply chain challenges.
It’s important to note that the enduring strength of digital commerce has contributed to economic growth and increased brand value, although not all eCommerce investments have been successful. The report emphasizes the significance of underlying business fundamentals as a predictor of successful investment activity. Amidst the COVID-19 pandemic, digital platforms have been accelerated in adoption.
As a leading independent investment bank and financial advisory firm, BGL specializes in assisting consumer companies, particularly in the eCommerce sector. They provide expertise in positioning strategies and growth-oriented projection models to optimize branded and managed marketplace direct-to-consumer (DTC) and business-to-business (B2B) eCommerce platforms.
Investors and consumer businesses should closely monitor these shifting dynamics in order to make informed investment decisions and effectively navigate the evolving landscape of global supply chains.
For more information on the subject, you can visit the official website of Brown Gibbons Lang & Company (BGL) at link name.