By Avi Salzman
It's harder than ever to buy the rare metal gallium from China for your high-tech military radar system -- but it's easier than ever to buy Chinese soft-serve ice cream in the U.S.
China's been blocking U.S. buyers from purchasing systemically important products, like gallium, as the two countries battle over tariffs. At the same time, Chinese companies are making a big play for the U.S. consumer when it comes to systemically unimportant stuff, like bubble tea and linen pants. Recently, Chinese companies have also begun taking over recognizable American brands, making intriguing -- and sometimes controversial -- inroads into U.S. markets.
For instance, Everlane, an American direct-to-consumer clothing brand that touts its sustainable and ethical practices, is being purchased by Shein, the fast-fashion brand associated with cheap, disposable clothes. Shein was founded in China, but is now headquartered in Singapore.
Shein didn't respond to a question from Barron's about its plans for Everlane, which caused hand-wringing among fans of the brand, who worry Shein will change Everlane's ethos.
Everlane CEO Alfred Chang told the publication Retail Dive that Everlane would operate as an independent brand "staying true to our longstanding brand values, sustainability commitments, and exceptional quality."
Americans already can buy Shein clothes, but the purchase of Everlane gives the company an even bigger foothold into the market -- and access to higher-end consumers. Shein has long sought more American customers, and reportedly has wanted to list its stock in the U.S. too, but faced political pushback as relations between China and the U.S. deteriorated.
Other Chinese companies have also been making inroads into the U.S. Centurium Capital, a Chinese private equity firm funding the Chinese chain Luckin Coffee, just bought the specialty chain Blue Bottle Coffee, which was founded in California and then purchased by European conglomerate Nestle. Blue Bottle has more than 100 locations in the U.S. and Asia. (Nestle will retain Blue Bottle's packaged goods business).
Luckin, a fast-growing coffee chain with over 31,000 locations, is considered a major competitor to Starbucks internationally, and is now China's largest cafe chain.
But Luckin is emerging from a rough period: It settled fraud charges with the Securities and Exchange Commission in 2020 after the agency said Luckin had "intentionally fabricated more than $300 million in retail sales."
Luckin said at the time the settlement "reflects our cooperation and remediation efforts, and enables the company to continue with the execution of its business strategy." Its stock was delisted from the Nasdaq. Luckin has continued expanding since, and last year started opening its first U.S. locations. It's known for inexpensive, cashless takeout cafes that allow for quick coffee pickups.
Blue Bottle, by comparison, is a higher-end brand associated with stylish cafes and relatively expensive brews. Centurium and Luckin didn't respond to requests for comment on what they plan to do with Blue Bottle. Last year, Luckin CEO Jinyi Guo said the company was looking to relist its stock on the Nasdaq.
Another major Chinese company called Mixue has also made a play for U.S. consumers. Mixue is the largest food chain in the world, with over 50,000 locations, but it's hardly known in the U.S. That's changing. Mixue (pronounced "mee-shuh") launched its first U.S. locations late last year, and now has stores in Los Angeles and New York. The shop sells soft-serve ice cream, bubble teas, and shakes.
At a recent visit to the chain's Times Square location, it was clear the secret had gotten out: At least a dozen people were waiting in line to place their orders on touch-screens. The prices are particularly eye-catching for an expensive city like New York -- a $1.19 cone of soft-serve or $3.79 milk tea, for instance. Mixue stock is listed on the Hong Kong exchange.
It's a curious time for Chinese chains to try to make inroads into the U.S., given the escalating tensions between the two countries. One analyst who follows the Chinese market closely told Barron's that he believes the Chinese brands are interested in catching the attention of American investors as much as consumers.
"In our view, both Luckin and Shein appear to share a common strategic objective: improving access to U.S. capital markets, particularly given Shein's challenges in pursuing a U.S. listing and Luckin's prior delisting from Nasdaq," wrote Longdley Zephirin, a principal at The Zephirin Group, in an email to Barron's. "While we do not believe these acquisitions alone are likely to materially improve regulatory credibility, they can still be viewed as attempts to foster goodwill and demonstrate a willingness to invest in established US consumer brands."
Bankers may not go out of their way to save $1 on a cup of coffee, but they might get intrigued if they see the brands gaining acceptance in the U.S.
Zephirin also thinks Blue Bottle and Everlane were ripe for the picking. He thinks both were overlooked brands that made them more attainable for the Chinese companies, as opposed to swallowing a bigger U.S. consumer company. These may not be major financial acquisitions, given the sheer size of Luckin, but the purchases have "strategic and political signaling value," he argues.
Zephirin said he wouldn't invest in Luckin or Shein, given the broader geopolitical risks and other issues. Some fast-growing Chinese consumer companies have also failed to solve a basic financial problem: their discounts are attractive to consumers, but they tend to fuel price wars that erode profits. Mixue's Hong Kong-listed shares, for instance, are down 35% this year, despite its speedy expansion -- or perhaps because of it.
Investors will have to see more evidence of profitability for the shares to look nearly as good as those bubble teas.
Write to Avi Salzman at avi.salzman@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
June 01, 2026 01:00 ET (05:00 GMT)
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