MediaMarkt and Fnac are about to fall into the hands of the Chinese giant JD.com
The Asian company will become the largest shareholder in the German company and the second largest in the French company.
ParisMediaMarkt is one of Germany's most iconic companies, just as Fnac is in France. "It's cultural sovereignty. It's the leading bookseller in France, a French cultural institution," a former French Minister of Economy declared, referring to Fnac. In the neighboring country, MediaMarkt, which sells electronics and household appliances, has always been the epitome of a company that started from scratch and became a multinational. It's the pride of a country considered the economic engine of Europe and an industrial leader.
While the shareholding of both companies has been predominantly held by Germans or European shareholders until now, things are about to change. The Chinese company Jingdong, known as JD.com, an Asian online retail giant similar to the American Amazon, is looking to expand beyond China and has already taken its first steps. JD.com plans to acquire 71% of the capital of the German company Ceconomy, the parent company of MediaMarkt and Saturn. As a side effect, the Asian company will acquire shares in Fnac-Darty because Ceconomy has held 22% of the French company's capital since 2017. Jingdong is the third largest company in the sector in China, behind Alibaba and Pinduoduo, the parent company of Temu.
JD.com will become the largest shareholder in MediaMarkt and the second largest in Fnac. In fact, the first part of the transaction was completed on November 10th, and the second part is expected to be finalized this week. JD.com has taken control of Ceconomy after paying €2.5 billion, representing one of China's largest investments in European retail. The purchase has already received approval from the German competition authority and is now awaiting approval from the German government, the European Commission, and the French government.
France opposes the acquisition
In Germany, the purchase of Ceconomy and its subsidiaries by a large Asian company has not generated much controversy, and it is unlikely that the government will veto the deal. In contrast, the French government is not at all pleased that a Chinese company has become the second-largest shareholder in a company considered a flagship of the country, especially now that another Asian giant, the online company of'ultra-fast fashion Shein has landed in France, opening its first permanent physical store in the worldThe French government has launched a legal battle against Shein and will most likely now do everything possible to prevent JD.com from acquiring a stake in Fnac-Darty. France believes that a Chinese company becoming the second-largest shareholder in Fnac-Darty jeopardizes its cultural sovereignty and, therefore, the government wants to invoke foreign investment controls (FICs), an economic security tool that France can use to curb corporate investments. Some of these investments, those affecting national defense or those "likely to jeopardize public order and activities essential to guaranteeing the country's interests," require express government authorization. According to the business weekly The TribuneSources close to French Economy Minister Roland Lescure confirmed that JD.com has already submitted the IEF dossier, at Paris's request, and that the ministry will study it "very rigorously." Last week, the CEO of Fnac Darty, Spaniard Enrique Martínez, met with the Minister for SMEs and Trade, Serge Papin, the weekly magazine reports. According to the BFMTV network, Martínez "is not happy" about the arrival of the Asian company. "We will be very firm and extremely sensitive to ensuring that household appliances manufactured in France continue to be produced on our territory," ministry sources told the same network. The government could require JD.com to make commitments regarding the origin of products sold at Fnac and Darty. Concern over customer data
In addition to the origin of the products, one of France's concerns relates to customer data: a 2017 Chinese law authorizes the Asian government to request sensitive data from its companies' European subsidiaries. "The arrival of JD.com is not just a matter of logistics or prices, but a matter of mass profiling and strategic influence," he explains. The TribuneFnac-Darty has data on two million customers, including their cultural and consumption habits. In Spain, MediaMarkt has 110 stores and 7,000 employees, while Fnac has around 30 stores and approximately 2,000 employees.
