Chinese acquisitions of US companies: A controversial practice

The 2013 acquisition of pork-producer Smithfield Foods by Shuanghui International (now WH Group) is the largest Chinese acquisition of a US company to date. This case study explores previous Chinese acquisitions and their controversies. The case study also discusses the food security issues that have led to the Smithfield acquisition and others like it.

Scope

  • This case study examines the growth in Chinese acquisitions of US companies from the 1990s to now, and looks at how they have changed.
  • It also looks at the food security issues facing China, including a growing population, increased consumption per capita, and decreasing arable land.
  • The Smithfield Foods acquisition by Shuanghuai is examined, as well as other food acquisitions by Chinese companies.
  • Finally, this case study looks at the controversies that continue to surround Chinese acquisitions of US companies.

Reasons to buy

What are some notable examples of Chinese acquisitions of US companies?

Why does China acquire foreign companies?

Why is China's food security facing concerns?

Why do Chinese acquisitions of US firms continue to generate controversy?

Companies mentioned

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Table of Contents

OVERVIEW

Catalyst

Summary

CHINESE ACQUISITIONS OF US COMPANIES HAVE STEPPED UP SINCE THE MID- TO LATE-NOUGHTIES

State-owned companies have dominated past deals

Early- to mid-noughties ...

OVERVIEW

Catalyst

Summary

CHINESE ACQUISITIONS OF US COMPANIES HAVE STEPPED UP SINCE THE MID- TO LATE-NOUGHTIES

State-owned companies have dominated past deals

Early- to mid-noughties acquisitions were often unsuccessful

Privately-owned companies stepped up acquisitions after China became a member of the WTO

Early deals were unsuccessful

Chinese acquisitions in the US have jumped since 2007

ACQUISITIONS HAVE HELPED CHINESE COMPANIES ACCESS RESOURCES AND FOOD AND HAVE HELPED BUILD THEIR BRANDS

Acquisitions can give China access to natural resources

Brand building enables Chinese companies to compete on a global stage

Population growth, industrialization, and increased food consumption have affected China's food security

China's arable land has decreased

China's per capita consumption has increased

Water has been affected

China's food scarcity has led to food company acquisitions

SMITHFIELD FOODS WAS ACQUIRED IN 2013

Smithfield Foods is the largest hog and pork producer in the world

Smithfield Foods was acquired by Chinese company Shuanghui in 2013

CHINESE ACQUISITIONS CONTINUE TO GENERATE CONTROVERSY

Many historical transactions have been blocked or thrown up worries about security

Controversy has led to some acquisitions being blocked

Technology companies, Huawei and Lenovo, have triggered worries about security

The acquisition of Smithfield has sparked various concerns

American companies are unable to takeover established Chinese companies

Critics are worried about sub-standard Chinese products being sold in the US

CONCLUSIONS

Chinese acquisitions continue to remain controversial in the US

APPENDIX

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