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Introduction

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.

Features and benefits

* 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.

Highlights

Chinese acquisitions were dominated by state-owned companies before China became a member of the WTO and the Chinese government's approached changed, allowing privately-owned companies to engage in international M&A activity Foreign acquisitions by Chinese companies grew rapidly throughout the 2000s.
China's rapid urbanization and population growth has led to a decrease in the amount of arable land: China has one of the lowest per capita cultivated farmland in the world, with around 0.09 hectares of arable land per capita, less than half the global average and six times less than the arable land per capita in the US
Bright Food purchased a £1.2bn (approximately $108bn) 40% stake in the UK's second biggest cereal producer, Weetabix, in 2012. As of early 2015, the company is poised to buy the remaining 40%, which will give it full ownerships of brands such as Alpen, Ready Brek and Weetos.

Your key questions answered

* 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?

Table Of Contents

Chinese acquisitions of US companies: A controversial practice
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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