China’s appetite for foreign food M&A is gaining momentum with news that meat processor Shuanghui International has offered to buy US pork products maker Smithfield Foods (NYSE: SFD) for $4.7 billion. The deal would be the biggest purchase ever of a foreign food maker by a Chinese firm, following a recent spate of smaller but still major deals by names like Bright Food (Shanghai: 600597). But the deal drew controversy almost as soon as it was announced, with at least one US politician and an industry group voicing their concerns about the transaction. Read Full Post…
Just a month after Shanghai’s Bright Food Group gobbled up British breakfast cereal maker Weetabix, we’re hearing that rival dairy products specialist Yili (Shanghai: 600887) has developed its own appetite for global M&A with its purchase of a New Zealand dairy. This latest purchase could mark the beginning of a broader wave of M&A by Chinese food makers, who are looking outward not only to tap foreign food markets but also to hopefully learn a lesson on how to better control the quality of their food.
Shanghai’s historical place as a mixing point between east and west has burnished the city’s reputation as a hub of revolution and experimentation, which is appearing now on the breakfast table as a leading local food group tries to sell Shanghainese on western-style breakfast cereal. Shanghai watchers will know of course that I’m talking about local food superstar Bright Food Group, which has just closed its purchase of a controlling stake of British breakfast cereal giant Weetabix for more than $1 billion.
Another food safety scandal made headlines in China last week, this time when the dairy unit of Shanghai’s Bright Food was fined after its products were found swirling at the center of a recent string of controversies. But unlike previous scandals, this one involved a company with major global aspirations, as reflected by Bright’s recent string of overseas acquisitions. The fact that China’s first global food conglomerate may be a food safety laggard is hardly a message that Beijing should want to send the world, and will only make skeptical Westerners wary of Chinese food products. To prevent that from happening, which would hurt not only Bright but also future Chinese global aspirants, Beijing should seriously consider taking stronger actions against this globally minded company.
As inventor of the western-style breakfast cereal that is typically eaten cold with milk, Kellogg (NYSE: K) is a household name in the US and many European markets. But it has yet to find the right formula for Asia, where rice porridge and soy milk served hot still dominate the breakfast market. Now the US breakfast giant is preparing to try to change Chinese tastes through a joint venture with a Singaporean company that will sell Kellogg brand products, presumably including its trademark breakfast cereals, to millions of Chinese.
