Pork manufacturer Shuanghui‘s purchase of Smithfield was the latest move of Chinese companies to enter a global economy, and they want to hedge a slower growth in their domestic markets, tells business analyst Shaun Rein AFP.
Shaun Rein, managing director of China Market Research Group, identified two key drivers behind the phenomenon: Chinese companies’ increasing appetite to be world players, combined with the pressures of a less robust domestic economy.
“A lot of Chinese companies have the ambition to become global brands,” he said, giving Fosun as an example. “They’re very aggressive, very ambitious and they want to grow fast.
“They’re looking at getting access to the American and European markets in order to shield themselves from what is definitely a slowing Chinese economy,” he added…
China turned in its weakest economic performance in 13 years in 2012, with growth sliding to 7.8 percent for the year.
Acquisitions of foreign brands and technology can also pay important dividends domestically with Chinese consumers fed up by food, quality and safety scandals.
Earlier this year, China was shocked by the spectacle of more than 16,000 dead pigs recovered from parts of Shanghai’s main river, one of a long line of food controversies.
“It’s about bringing American pork, trusted American pork, to the Chinese consumer,” Rein said of the Smithfield acquisition. “Chinese are petrified of domestic-raised pork, pigs and cattle because of quality control concerns.”
China Weekly Hangout
Internet companies are one of the industrial groups, looking increasingly to enter a global market. The China Weekly Hangout discussed in November 2012 their worldwide ambitions with with Steven Millward of Tech in Asia, and Fons Tuinstra of the China Speakers Bureau about Baidu, Tencent, Alibaba and other Chinese internet companies exploring the world. Main conclusion: most larger companies are positioning themselves in Southeast Asia.
Coming Thursday June 6, the China Weekly Hangout will discuss the art of negotiating trade negotiations, with our in-house negotiation expert +Andrew Hupert of +China Solved as one of the guests. You can read our announcement here, or register at our event page for action.