Yes Virginia, the Ham Is Chinese (Part 4)

The emerging middle class in China represents enormous opportunity not only for Smithfield but also for many American companies.  For companies like General Motors, Procter & Gamble, Yum Brands, and Caterpillar, China is where the growth is. Coca Cola has described China as “the commercial opportunity of the 21st century”.  In 2013, KFC, McDonald’s, and Starbucks will reportedly each open one new restaurant every day in China. But, such market expansion must be a two-way street.  For more American firms to be able to have access to the Chinese marketplace, Chinese firms must be allowed and encouraged to compete in the United States.

Previous investment attempts by Chinese companies have not always gone smoothly. A big obstacle has been that many deals have touched on  national security sensitivity.  The Committee on Foreign Investment in the United States (CFIUS), is a U.S. inter-agency government panel that reviews foreign deals for national security issues.  In 2005, Cnooc tried to buy Unocal but ran into insurmountable U.S. political opposition and retreated from the deal.  In 2011, China’s Huawei had attempted to acquire the U.S. technology company 3Leaf Systems but withdrew after CFIUS stipulated restrictions. In 2012, a CFIUS review of an acquisition of Oregon wind farms by Ralls Corp, owned in turn by executives of the Chinese Sany Group, collapsed, since some wind farm properties were located near a sensitive U.S. naval facility. Even the Cnooc acquisition of Canada’s Nexen had to accommodate concerns raised by CFIUS over U.S. operations.

While Chinese deals for energy, technology, and infrastructure businesses are likely to draw serious scrutiny by CFIUS, consumer goods businesses are a different matter.  These deals will be far less sensitive.

For our and their investment benefit, Chinese companies should focus on companies that are heavily dependent on consumer choice and preference like Smithfield.  Will American customers continue to prefer these brands after a foreign acquisition?  If the brands continue to pursue the marketing discipline of providing great value and pleasure, the answer is likely to be a resounding “yes”.

This article is the final part of a series written by Michael Czinkota and Charles Skuba. Read part 3 here.  Guest writer Charles Skuba teaches international business and marketing at Georgetown University. He served in the George W. Bush Administration in trade policy positions in the U.S. Department of Commerce.

17 thoughts on “Yes Virginia, the Ham Is Chinese (Part 4)

  1. It is appropriate time to make some plans for the future and it’s
    time to be happy. I have read this publish and if I may
    I wish to recommend you some fascinating issues or advice.
    Maybe you can write next articles referring to this article.

    I desire to learn even more things about it!

  2. Whats up this is somewhat of off topic but I
    was wondering if blogs use WYSIWYG editors or if you have to manually code with HTML.

    I’m starting a blog soon but have no coding expertise
    so I wanted to get advice from someone with experience.
    Any help would be enormously appreciated!

  3. Awesome website you have here but I was curious if you knew of any user discussion forums that cover the same topics
    talked about in this article? I’d really love
    to be a part of online community where I can get feedback from other experienced individuals that share the same interest.

    If you have any suggestions, please let me know.
    Many thanks!

  4. Hello, I think your blog might be having browser compatibility issues.

    When I look at your blog in Firefox, it looks fine but when opening in Internet Explorer, it has some
    overlapping. I just wanted to give you a quick heads up!

    Other then that, amazing blog!

  5. I’m gratified with the way that michaelczinkota.com handles this sort of issue. Generally on point, sometimes controversial, consistently well-researched and more often than not quite thought-provoking.

  6. Simply want to say your article is as surprising. The clearness in your post is simply spectacular and i can assume you’re an expert on this subject. Well with your permission allow me to grab your feed to keep up to date with forthcoming post. Thanks a million and please keep up the enjoyable work.

Leave a Reply