https://orcid.org/0000-0002-7970-2472
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ABSTRACT
China’s wave of outbound foreign direct investment (OFDI) in food production has created vast commercial opportunities for host countries but has also raised concerns about political dependence on the Chinese market, charges of commodity expropriation, and concerns over the loss of food brands and technologies. While most attention is focused on the political drivers behind Chinese investments in grain production, this article examines the dairy industry, a sector that answers both to policy, and to productive and consumer forces. Using records from the Shanghai Stock Exchange, this article examines the rise of OFDI by China’s dairy giants as the result of the consolidation of the domestic industry, the political promotion of agrarian globalisation, and the complex consumer appeal of foreign foods. Against this background, two contrasting case studies show how the aims and strategies of dairy investments have changed. Guangming’s disastrous 2014 purchase of a controlling stake in Israel’s Tnuva dairy cooperative capped off the initial rush for branded assets. In contrast, the China Animal Husbandry Group’s successful investment in the Mataura Valley Milk plant in New Zealand represents the subsequent trend towards greenfield investments in productive capacity.
SECOND-LANGUAGE ABSTRACT
中国在食品生产领域的对外直接投资 (OFDI) 浪潮为东道国创造了巨大的商机, 但也使当地政府担忧政治上过于依赖中国市场, 征收额外的商品税费以及食品品牌和技术流失等问题。本文虽然主要讨论中国在粮食生产投资方面的政治驱动力, 但也考察了乳制品行业。这个领域既反映政策的影响, 同时也能反映生产力和消费力的作用。本文通过上海证券交易所的记录, 发现由于国内行业整合, 农业全球化的政治推动以及外国食品对消费者的复杂吸引力等原因, 中国乳业巨头对外直接投资不断增长。以此为背景, 从两个不同的案例研究中可见乳制品投资目标与策略随之发生变化。光明乳业在 2014 年收购以色列 Tnuva 乳制品企业的控股权, 结果却不尽人意, 从而结束了当时热衷于国外品牌资产投资的风潮。相比之下, 中牧集团对新西兰马陶拉谷牛奶厂的成功投资, 代表了随后对产能进行绿地投资的趋势。
Acknowledgements
This paper relied heavily on the perspectives of colleagues and contacts across China’s dairy production chain, and the extremely helpful comments of the journal’s two anonymous readers. I thank the journal’s editors, as well as E Mei, Yoram Evron, Rotem Kowner and Misako Suzuki. Earlier drafts were presented at Fudan University and the University of Michigan.
Disclosure Statement
No potential conflict of interest was reported by the author.
Notes
1. According to a report by China’s Department of Commerce, agriculture, forestry, animal and fishery industries accounted for 1.8 per cent the total overseas investment of 2019 (Shangwubu, Citation2020, 12–13). The American Enterprise Institute China Global Investment Tracker (http://www.aei.org/china-global-investment-tracker/), which includes only investments in excess of US$100 million, reports slightly different figures, but a comparable proportion for agriculture.
2. This article focuses on the mainstream consumer product of cow dairy. There are also significant investments in commercial production of sheep, water buffalo and camel dairy.
3. Upscaling of rural production was a key provision of the 11th and subsequent FYPs (see State Council, Citation2015; ZNN, 2008, 74).
4. At the time, Shuanghui was preparing for its IPO in Hong Kong. See Kong et al. (Citation2019) on how food scandals affect stock price.
5. Chinese outbound investment peaked in 2016 at US$196 billion. Subsequent measures to stem the surge in capital outflows also included stricter reporting of overseas investment. The declarations used in this paper span this change in reporting regime (Han, Citation2018; Shangwubu, Citation2020, 3–4; Song, Citation2019).
6. Feihe sought an IPO in Hong Kong after delisting from the NYSE in 2013. The investment was made through Canada Royal Milk, a newly formed subsidiary.
7. Between 2006 and 2015, the raw-milk purchase price ranged from a low of 1.86 RMB to a high of 4.26 RMB/kg, the lowest edge coming in the months before the melamine crisis was exposed (ZNN, 2016, 468).
8. Meanings can also be reversed. Feihe advertises that its infant formula produced in Canada is specially made for Chinese babies.
9. The Bank of China Corporate Social Responsibility report for 2015 mentions the provision of a syndicated loan to Guangming in support of the political aims of the New Maritime Silk Road (Bank of China, Citation2016, 16), but no other report mentions the Bank of China’s involvement.
10. Focusing solely on one kind of environmental impact can produce a distorted image. Measured by carbon footprint, the New Zealand industry is by far the most efficient in the world (see Allen, Citation2021).
11. Instructions to potential suppliers appear on Mataura Valley Milk’s website: https://mataura.com/supply-milk/.