FacebookTwitterGoogle+RedditEmail

Syngenta and the Chinese Factor

by

shutterstock_148936832

Monsanto, the US-based biotech and agribusiness colossus, is seeking a merger with its European competitor Syngenta. Such a transaction would create a gargantuan corporation that would control 45% of the world’s commercial seeds and 30% of the farm chemicals market. This is a time of major mergers in the ag sector. The largest of these took place last November, when two of the largest US players, Dow and Dupont, agreed to merge. The resulting spawn of both will have no less than 25% of the world commercial seed market.

The much-talked about Monsanto-Syngenta merger is likely but not inevitable. Monsanto began 2016 with its third buyout offer to the European corporation in less than a year. Syngenta’s management announced it will not decide on Monsanto’s latest bid right away because it is considering other offers. In a conference in Switzerland in mid-January, company chairman Michael Demare said it is evaluating proposals from German companies BASF and Bayer, which are also world leaders in the agricultural biotech and pesticide sectors, and from ChemChina.

Although not very well known in North America and Europe, the Chinese state-owned ChemChina is one mammoth of a corporation. With $45.6 billion in annual revenues and some 140,000 employees, it ranks 265th in the Fortune 500 index.

“ChemChina became a pesticide powerhouse in 2011 when its subsidiary, China National Agrochemical Corporation, acquired Makhteshim Agan Industries (Israel), the world’s 7th largest pesticide manufacturer, and became ADAMA”, said the Canada-based ETC Group. “With revenues over $3 billion in 2013, ADAMA sells generic pesticide products in more than 120 countries… ADAMA’s largest market is Europe (37%), followed by Latin America (25%).” (Parentheses in original)

ChemChina’s interests go way beyond agrochemicals. Last year it acquired Italy’s Pirelli, one of the world’s leading tire manufacturers, for $7.9 billion. Its other major purchases include French firms Adisseo and Rhodia, Australia’s Qenos, Norwegian silicon maker Elkem, German machinery maker Krauss Maffee, and 12% of Swiss energy trader Mercuria.

ChemChina is headed by the flamboyant Ren Jianxin, a high-ranking Communist Youth League member who took the unusual step of going into business rather than politics. “Over three decades, Ren has led the restructuring of China’s chemicals industry, organizing more than 100 firms under the ChemChina banner into six main operating divisions, producing everything from basic chemicals to fertilizers and silicones”, said Reuters. Ren recently hired Bayer director Michael Koenig to run one of ChemChina’s subsidiaries, a move that raised eyebrows since state-owned companies very rarely ever hire foreigners to executive positions.

The company is also looking to expand its presence in the domestic market. A merger with Syngenta would turn ChemChina into the country’s top pesticide company. This is no small undertaking, given that China is the world’s third largest pesticide market, after the US and Brazil. If foreign agrochemical companies were to be interested in investing in China’s vast market they would find themselves squeezed into a minor corner by a gigantic Syngenta-ChemChina combination.

ChemChina’s ambitions are part of a larger story. Chinese food and agriculture companies are moving abroad and starting to compete toe to toe with their Western counterparts and even buying them out. In 2013, China’s Shuanghui corporation bought Smithfield, the leading US pork company, for $7.1 billion, the largest ever purchase of a US company by Chinese investors.

Another Chinese company to watch is COFCO, the country’s leading food processor, which acquired a controlling stake in the Netherlands’ agricultural commodity trader Nidera. The majority stake in Nidera would give COFCO greater control over pricing and better access to Latin America and Russia, important grain-growing regions, the Wall Street Journal reported in 2014.

So what happens if ChemChina beats Monsanto to the Syngenta finish line? The Missouri-based company, which has been hitting hard times in the recent months, may end up trampled and squashed, unable to compete with a Dow-Dupont and a Syngenta-ChemChina.

According to the ETC Group: “No matter which mergers/acquisitions ultimately materialize, there’s little doubt that the infamous Monsanto name will soon be history.”

SOURCES

Owen Covington. “Syngenta board reportedly supports pursuing ChemChina deal” Triad Business Journal, January 19 2016. http://www.bizjournals.com/triad/news/2016/01/19/syngenta-board-reportedly-supports-pursuing.html

ETC Group. “Breaking Bad: Big Ag Mega-Mergers in Play” December 15 2015. http://www.etcgroup.org/content/breaking-bad-big-ag-mega-mergers-play

http://www.feedandgrain.com/news/why-chemchina-insists-on-acquiring-syngenta

Financial Times. “ChemChina closes in on another prize purchase” http://www.ft.com/intl/cms/s/0/78d04e32-c26e-11e5-808f-8231cd71622e.html#axzz3yGS3Cp7E

Sophie Song. “China State-Owned Food Giant COFCO Corporation Spends Billions Buying Nidera” International Business Times, February 28 2014. http://www.ibtimes.com/china-state-owned-food-giant-cofco-corporation-spends-billions-buying-nidera-nv-1558616

Carmelo Ruiz is a Puerto Rican author and journalist. He directs the Latin America Energy and Environment Monitor, runs a bilingual blog on journalism and current affairs, and is a member of the directive commission of the Puerto Rico Socialist Front. His Twitter ID is @carmeloruiz.

More articles by:
Weekend Edition
July 29, 2016
Friday - Sunday
Michael Hudson
Obama Said Hillary will Continue His Legacy and Indeed She Will!
Jeffrey St. Clair
She Stoops to Conquer: Notes From the Democratic Convention
Rob Urie
Long Live the Queen of Chaos
Ismael Hossein-Zadeh
Evolution of Capitalism, Escalation of Imperialism
Margot Kidder
My Fellow Americans: We Are Fools
Phillip Kim et al.
Open Letter to Bernie Sanders from Former Campaign Staffers
Ralph Nader
Hillary’s Convention Con
Lewis Evans
Executing Children Won’t Save the Tiger or the Rhino
Vijay Prashad
The Iraq War: a Story of Deceit
Chris Odinet
It Wasn’t Just the Baton Rouge Police Who Killed Alton Sterling
Brian Cloughley
Could Trump be Good for Peace?
Patrick Timmons
Racism, Freedom of Expression and the Prohibition of Guns at Universities in Texas
Gary Leupp
The Coming Crisis in U.S.-Turkey Relations
Pepe Escobar
Is War Inevitable in the South China Sea?
Norman Pollack
Clinton Incorruptible: An Ideological Contrivance
Robert Fantina
The Time for Third Parties is Now!
Andre Vltchek
Like Trump, Hitler Also Liked His “Small People”
Serge Halimi
Provoking Russia
David Rovics
The Republicans and Democrats Have Now Switched Places
Andrew Stewart
Countering The Nader Baiter Mythology
Rev. William Alberts
“Law and Order:” Code words for White Lives Matter Most
Ron Jacobs
Something Besides Politics for Summer’s End
David Swanson
It’s Not the Economy, Stupid
Erwan Castel
A Faith that Lifts Barricades: The Ukraine Government Bows and the Ultra-Nationalists are Furious
Steve Horn
Did Industry Ties Lead Democratic Party Platform Committee to Nix Fracking Ban?
Robert Fisk
How to Understand the Beheading of a French Priest
Colin Todhunter
Sugar-Coated Lies: How The Food Lobby Destroys Health In The EU
Franklin Lamb
“Don’t Cry For Us Syria … The Truth is We Shall Never Leave You!”
Caoimhghin Ó Croidheáin
The Artistic Representation of War and Peace, Politics and the Global Crisis
Frederick B. Hudson
Well Fed, Bill?
Harvey Wasserman
NY Times Pushes Nukes While Claiming Renewables Fail to Fight Climate Change
Elliot Sperber
Pseudo-Democracy, Reparations, and Actual Democracy
Uri Avnery
The Orange Man: Trump and the Middle East
Marjorie Cohn
The Content of Trump’s Character
Missy Comley Beattie
Pick Your Poison
Kathleen Wallace
Feel the About Turn
Joseph Grosso
Serving The Grid: Urban Planning in New York
John Repp
Real Cooperation with Nations Is the Best Survival Tactic
Binoy Kampmark
The Scourge of Youth Detention: The Northern Territory, Torture, and Australia’s Detention Disease
Kim Nicolini
Rain the Color Blue with a Little Red In It
Cesar Chelala
Gang Violence Rages Across Central America
Tom H. Hastings
Africa/America
Robert Koehler
Slavery, War and Presidential Politics
Charles R. Larson
Review: B. George’s “The Death of Rex Ndongo”
July 28, 2016
Paul Street
Politician Speak at the DNC
FacebookTwitterGoogle+RedditEmail