The takeover of agrochemical giant Sygenta by ChemChina has sparked criticism about handing the rein over to a state-owned company.
Deep in the heart of Europe, located where the Swiss, French and German borders meet, lies the beautiful medieval city of Basel. Better known for its many cultural delights, Basel was also once the scene of a famous siege. Around 850 years since, the city once again finds itself in a similar predicament, with the locally based agrochemicals giant Syngenta this time holding the city gates against the advances of ChemChina – a Chinese state-owned enterprise.
The Swiss firm’s board of directors has accepted ChemChina’s $43 billion offer in what could be China’s biggest foreign takeover ever. If completed, the deal is supposed to increase China’s food supply and the productivity of Chinese farmland. However, the deal has come under fire from a group of shareholders, who are challenging the logic of handing over the reins of power to a Chinese state owned company. According to the group’s spokesman, Syngenta has existed within, and is directly a result of, a successful economy which is strongly underpinned by liberal values – common sense dictating the “nationalization” of Syngenta to be wholly incompatible with its corporate culture.
What’s more, the deal is expected to hit a snag in the US, where regulators could strike it down as some of Syngenta’s facilities are potential terror targets. Two of its facilities are registered with the Chemical Facility Anti-Terrorism Standards, a program run by the U.S. Department of Homeland Security, which has a track record of seeing Chinese ownership of sensitive assets as posing a national security risk.
Takeovers of European firms by Chinese organizations are, of course, nothing new. In 2015 alone over $32 billion was spent by the Chinese on European acquisitions, and there are very good reasons for this. Through its “new silk road” infrastructure, a series of land and maritime links, a serious push is being made to bring Europe and the rest of the Eurasian continent into the Chinese fold. The startling fact that China has poured more concrete for construction in two years than the US did in the entire 20th century reflects the scale of Beijing’s developmental ambitions, especially in the west.
Acquisitions on the scale of that attempted for Syngenta, do not stand alone. Even now, for instance, Chinese shipping company COSCO is bidding for the Greek port of Piraeus, taking advantage of the nation’s privatization shake-up to secure a port that handles around 3.6 million 20-foot equivalent units of containers every year – one of the biggest in the world.
That the Greek government has so far proved reluctant to sell Piraeus is less to do with concerns over Chinese interference than its own entrenched opposition to privatization. Unfortunately, however, Europe’s leaders in general have shown no such compunction to act in the pursuit of common sense, nor in the national interest, in their respective efforts to claim a share of China’s swollen coffers.
Most notably, this has been the case in China’s bid to secure Market Economy Status (MES). Still currently classified as a non-market economy (NME), China has been looking forward expectantly to the year 2016 as the year it gains MES according to a previous agreement with the WTO. However, that particular agreement depended upon certain changes being implemented regarding China’s state regulation, not just of private enterprise, but also of certain upstream factors such as energy and capital; factors which could be brought into play to create an unfair advantage for Chinese manufacturing.
This is important as it becomes far more difficult for claims of unfair pricing, or “dumping”, to be brought against Chinese firms once MES is obtained. With a vast number of such claims brought against Chinese firms overseas, China has a lot to gain by circumventing them through MES while the manufacturers of those nations affected have much to lose. And yet, amidst this obvious need to halt China’s progress towards Market Economy Status, Europe has shown significant support: much to the chagrin of the US.
That the UK is at the forefront of efforts to rally support for China probably comes as no surprise, ever willing to secure short-term gains at the expense of its own workforce. More surprising is the vote of confidence being extended to China by Germany, with Angela Merkel already indicating her support for China’s quest.
Some opposition does exist, with France and Italy leading in the vanguard, in addition to a number of industry lawyers, unionists and other trade experts. However, with Germany forcing the issue, it is difficult to see Brussels siding with the cynics and there are strong signs that the European Commission is already growing sympathetic to the Chinese claim – support which is almost certainly motivated by Europe’s pursuit of a €300bn Chinese infrastructure fund.
Perhaps George Osborne, the minster responsible for overseeing the UK economy, could explain his reasoning for greasing the wheels of Chinese trade to the 2,200 steel workers who were recently laid off in Redcar, directly as a result of unfairly priced Chinese steel.
The UK and the EC both, it would seem, are easily bought by a vigorous and ambitious Yuan, powerful enough to make European leaders forget about China’s human rights problems, dreadful environmental record, dumping of commodities on European markets, persecution of its Uighur minority or the military scuffles with its South China Sea neighbors.