Despite legitimate concerns, like quality control and food inflation, the purchase of America’s largest meat producer Smithfield by China’s Shuanghui is a deal that can only deliver winners, says Shanghai-based business analyst Shaun Rein in the New York Times.
There is, however, a difference between legitimate concerns and overreacting to every investment in The United States by Chinese companies. Most acquisitions are a net positive for America, both for preserving jobs and creating opportunities to sell American-made products into the still-growing Chinese market.
More Chinese companies are looking to expand overseas through acquisitions. According to a survey by Capital A, Chinese firms invested $37.8 billion overseas in 2012. My firm, The China Market Research Group, expects investments to grow by 20 percent annually over the next five years.
Unlike many Japanese firms in the 1980s that gutted workforces and imposed glass ceilings for U.S. employees, Chinese companies mostly keep management teams intact as Wanda has done with AMC Theaters and Lenovo did with the IBM ThinkPad division. They are looking to gain know-how to bring their practices to international standards. There is a public confidence crisis in China in the safety of Chinese brands, and as a result Chinese brands are desperate to learn from American ones.
The China Weekly Hangout
The Shuanghui/Smitfield deal is expected to get easier clearance from US authorities, because Shuanghui is a private company, not state-owned. But it would not be the first private Chinese company to run into trouble with US authorities. The China Weekly Hangout discussed the case of Huawei in October 2012 with David Wolf, author of Making the Connection, a book about China’s telecom giant Huawei, and Andrew Hupert, specialist in international conflict resolution. Both discuss the future of Huwei, moderated by Fons Tuinstra, president of the China Speakers Bureau.the case of Huawei, after the company ran into trouble in the US.