Milling & Baking News - March 5, 2013 - 7

Editorial



Asia expands participation in U.S. business

rain-based foods is an industry that all along toward its buying American companies. Earlier efits supply chain, from grain origination to forts to purchase energy and telecom businesses met
food manufacturing and retail selling, has with strong U.S. resistance.
dealt with foreign-owned companies. With all that exIn considering the Chinese acquisitions along with
perience, it still may be surprising that a fairly new di- the large transactions originating from other countries
rection has hardly drawn attention. The new aspect is of the region, the case could be made that buying U.S.
the stepped-up activity coming from Asia, which up companies has gained a pan-Asian complexion. But Jato a few years ago had lagged other regions in seek- pan, another major Asian acquirer of grain-based foods
ing to acquire American companies. While the con- operations, is pursuing a course bearing little resemcept of large companies looking for growth by pur- blance to what Chinese companies are doing. In Japan’s
chasing U.S. operations is not confined to any nation case, specific acquisitions relate so closely to what the
or area, the sudden activity on the part of companies acquiring company’s business is in its home market that
headquartered in Asia merits examination. After all, one must surmise that the goal is to gain from different
it may be signaling trends that will have important skills and experiences in the two countries. In that way,
consequences for the future direction of grain-based gains will be made that will benefit and also expand the
foods. This industry just now seems on the verge of business and reach of the acquiring corporation.
experiencing significant shifts due to foreign ownerAt the same time, it is unwise to neglect the studies
ship of one important entity
that have sought to explain
The industry just now seems on the
or another.
the movement of Japanese inverge of experiencing signiﬁcant
The new interest from
dustrial investing from once
shifts due to foreign ownership of
Asia, reflected in acquisitions
being almost entirely within
one important entity or another.
of companies in diverse arJapan to extend to foreign
eas, is made doubly fascinating by the presence of a lands like the United States. “An appreciating yen
new player, China. Hardly anything symbolizes the and a stagnant domestic market make global expanastounding transformation of the Chinese economy sion a logical move for Japanese companies with bold
better than the way that this country has stepped up growth aspirations,” said McKinsey & Company, the
its acquisitions of U.S. companies to a record pace consulting firm, in a paper analyzing the breadth
only a few years after all such transactions involved of the Japanese international strategies. The point
U.S. companies buying Chinese businesses. In the is stressed that Japanese companies have no “silver
early stages of the investment flow from America to bullet” to assure success in such investments, that inChina, grain-based foods had a major role that subse- stead incremental value is sought by careful developquently slipped. The current stepped-up activity con- ment of strategic intentions to match the dynamics of
trasts with what is a marked slowdown in domestic the industry in which the investment is made.
merger and acquisition transactions in both countries.
American grain-based foods companies that have
Currently, Chinese acquirers, often with govern- entered foreign markets have both stumbled and benment support, have focused their acquisitions on efited greatly. The latter has come mainly through
energy and entertainment, as well as discrete food business expansion, but also from lessons learned in
sectors. China’s record pace in acquiring U.S. com- new and often different environments. As the Ameripanies, approaching $10 billion in deals this year, has can food market becomes increasingly international,
been called the natural result of domestic progress even in its ownership, the industry has every reason
and of eagerness to protect food and energy supplies, to welcome the many positives than can flow from
where imports are large. It also is obvious that China this process moving forward and in all likelihood regis moving to take advantage of a change in attitude istering further expansion. MBN
MORTON SOSLAND, EDITOR-IN-CHIEF
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