TMTPOST -- By the end of 2025, another foreign brand asset has quietly changed hands in China, adding to a growing list of multinational companies rethinking how they operate in the world’s second-largest consumer market.

Ingka Centres, the property arm of IKEA owner Ingka Group, said recently it had completed a strategic partnership with Chinese investment firm Gaohe Capital to jointly own and invest in three LIVAT meeting and experience centres in Wuxi, Beijing and Wuhan. The two parties will establish a dedicated real estate fund for the assets, while Ingka Centres will retain exclusive responsibility for management and operations under the LIVAT brand, subject to regulatory approvals.

As part of the transaction, the existing IKEA store property in Wuxi will be converted into new leasing space for the LIVAT complex. IKEA China said it will open and operate a new store within the Wuxi LIVAT, while its stores in Beijing, Wuhan and Wuxi will remain fully owned and managed by IKEA China.

The deal marks the latest example of foreign brands turning to Chinese partners amid intensifying competition, slowing growth and shifting consumer preferences, as well as rising pressure to move away from asset-heavy models toward more flexible, localized operations.

Ingka Centres entered China in 2009 and has since invested more than 27 billion yuan ($3.8 billion) to build 10 meeting and experience centres and three LIVAT office projects. The partnership with Gaohe Capital, analysts say, reflects a broader recalibration underway among multinational companies operating in China.

From consumer goods and retail to food and beverage, an increasing number of foreign brands are either selling stakes in their China operations, bringing in local capital, or restructuring ownership and governance to give Chinese partners a larger role.

Restaurant Brands International (RBI), the parent company of Burger King, announced earlier this year that it would form a joint venture with private equity firm CPE Funds to establish Burger King China. Under the deal, CPE Funds will inject an initial $350 million to support store expansion, marketing, menu development and operational upgrades, and will ultimately hold about 83% of the venture.

General Mills has also been reported to be exploring a potential sale of its Häagen-Dazs ice cream store business in China for several hundred million dollars, according to people familiar with the matter. The discussions, which remain at an early stage, do not include the brand’s packaged retail products sold through supermarkets and convenience stores.

French sports retailer Decathlon, meanwhile, is planning to sell about 30% of its China subsidiary at an estimated valuation of 1 billion to 1.5 billion euros ($1.1 billion to $1.6 billion), according to market sources.

Perhaps the most closely watched transaction has been Starbucks’ strategic partnership with Boyu Capital, which followed more than a year of speculation and marked a new phase for the U.S. coffee chain’s China business.

For decades, foreign brands enjoyed rapid expansion in China by importing global playbooks into a fast-growing market with limited domestic competition. That advantage has eroded sharply.

Starbucks entered China in 1999, when tea dominated the beverage market and coffee was a niche category. Former chairman Howard Schultz later described the move as a gamble, as the company initially had little confidence in whether Chinese consumers would embrace its “third place” concept.

The bet paid off. Starbucks once commanded as much as 34% of China’s coffee market, becoming a symbol of urban middle-class consumption.

That dominance has since been challenged. The founding of Luckin Coffee in 2017 reshaped the industry by emphasizing low prices, digital ordering and aggressive delivery subsidies. Coffee culture gave way to price competition, convenience and rapid product iteration.

By the end of the third quarter of 2025, Luckin operated 29,214 stores globally, far exceeding Starbucks’ footprint in China. Luckin’s revenues and annual sales volumes have also surpassed those of Starbucks China, according to company disclosures.

Starbucks now faces competition not only from Luckin, but also from a crowded field of domestic chains such as Manner, M Stand, Cotti Coffee and Lucky Cup. Online-first brands like Saturnbird and Yongpu have siphoned off consumers, while leading tea chains including ChaBaiDao, Shanghai Auntie and Cha Yan Yue Se have expanded aggressively into coffee.

Under pressure, Starbucks China reported a 6% decline in same-store sales in the first quarter of 2025 and announced its first price cuts in the country since entering the market 25 years ago.

The shift has become emblematic of what Chinese executives often describe as “thirty years east, thirty years west” — a reminder of how market leadership changes over time.

Three decades ago, multinational companies acquired or outcompeted local brands by leveraging superior supply chains, technology and management expertise. Today, domestic Chinese brands have closed those gaps, often outpacing foreign rivals through faster decision-making, sharper pricing and deeper cultural resonance.

As a result, many multinationals are now actively seeking local partners to regain momentum.

Starbucks chairman and CEO Brian Niccol said Boyu Capital’s local experience would help accelerate the company’s expansion, particularly in smaller cities and emerging regions — a strategic shift for a brand long positioned as a premium urban offering.

In its fiscal 2025 earnings report, Starbucks said it had expanded to 8,011 stores across 1,091 county-level cities in China, underscoring the importance of lower-tier markets to future growth.

Whether that expansion can coexist with Starbucks’ global culture remains an open question. Founder Howard Schultz has repeatedly warned that neglecting corporate heritage can undermine long-term performance.

“Culture outweighs strategy,” Schultz said during a speech at Fudan University in 2024, reflecting on past leadership transitions. “If you don’t respect the legacy and values, it will show up in your financial results.”

Other global brands have embraced deeper localization with more tangible results.

Adidas Greater China offers a prominent example. After eight consecutive quarters of decline from 2021 to 2023, the business rebounded with ten straight quarters of growth. Revenue in the region fell from a peak of 1.155 billion euros to 520 million euros before recovering.

Former CEO Kasper Rorsted acknowledged the company had misread Chinese consumers, creating space for local competitors. In response, Adidas appointed Adrian Siu in 2022 as managing director for Greater China — the first Chinese national to hold the role.

The company shifted internal operations from English to Chinese, restructured supply chains and accelerated product development cycles. According to Adidas executives, the Shanghai Creativity Center can now translate consumer insights into products within weeks, while local supply chains can deliver new products within 24 hours.

For the third quarter of fiscal 2025, Adidas reported global revenue growth of 12% to 6.63 billion euros, with Greater China revenue rising 10%. CEO Bjørn Gulden said the company’s decentralized model — granting China greater autonomy — had been critical.

“The global market is not one single market,” Gulden said. “Local teams must make local decisions.”

Investors say such localization efforts are increasingly intertwined with capital restructuring.

Feng Weidong, founding partner of Tiantu Capital, said foreign brands are increasingly willing to sell stakes in their China operations while retaining brand ownership and licensing income, allowing them to share upside with local partners while reducing operational risk.

Yoplait China, operated under license after selling its China business rights to Tiantu in 2019, turned profitable in 2023 and saw earnings jump sharply in 2024, according to Tiantu disclosures.

But partnerships alone do not guarantee success. Consultants say leadership quality and governance structures are decisive.

“Professional managers who truly understand both local consumers and multinational corporate culture are extremely rare,” said Wen Zhihong, a partner at Hejun Consulting. “Changes in equity structure can improve decision-making, but they also introduce new complexity.”

If the first wave of localization focused on building supply chains and local teams, analysts say today’s “re-localization” goes further — granting Chinese teams real decision-making authority, independent R&D capabilities and cultural alignment with global headquarters.

With China’s consumer market more saturated and competitive than ever, the era of easy growth is over. For foreign brands, partnerships with Chinese capital are no longer tactical options, but strategic necessities.

Whether these alliances can restore sustained growth — without eroding brand identity — may determine which multinationals remain relevant in China’s next consumer cycle.