China Agriculture Investment Bimonthly Report is the 7th newsletter launched by CCM two months ago. The report focuses on four sections: Agricultural products, Fertilizers, Agrochemicals, Food & feed, analyzing from aspects of enterprises dynamic, macro economy update, M&A dynamic and analysis, central and local policy analysis, legislation & rules update, price update, etc.
The July Issue of China Agriculture Investment Bimonthly Report reveals that policies on foreign investment in China become stricter. As China's foreign direct investment has been on the rise, there is a trend that investment in M&A will be larger in China's foreign capital absorption in the near future. In 2010, China has been cautious in auditing M&A initiated by foreign enterprises, making the proportion of foreign M&A investment reduce to about 3% of the country's total.
In recent years, deal in foreign M&A has increased with the growing laws and regulations of M&A China issued. The Notice of the General Office of the State Council on the Establishment of the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the Notice) was released by the State Council of China on February 3, 2011, and the Notice covers agricultural products.
The main purpose of the Notice is to improve China's foreign policies and regulations system, and enhance transparency and promote development of M&A enterprises. Implementing safety review has some effects on China's agricultural products. First, it is effective to prevent the foreign enterprises' monopolistic conduct in agricultural products and processing industry of agricultural products. Second, it is helpful to stabilize prices of agricultural products. Third, it is effective to promote independent innovation capability of China’s agricultural enterprises. Then, it is beneficial for reasonable utilization of foreign capital concerning agriculture. Fourth, it will better ensure the development of domestic agricultural enterprises.
At present, foreign enterprises continue to control the Chinese key agricultural enterprises, trade and processing enterprises in China agricultural products industry. China agricultural products and market have been brought into global markets by foreign enterprises, then these foreign enterprises form absolute control and pricing. For example, in soybean industry about nearly 60% of the enterprises are with overseas background, which captures 85% of the Chinese market. In the long run, if foreign enterprises control more on Chinese agricultural industry or establish monopoly, small and medium-sized enterprises in China will be likely to be washed out from the market, and it even threats the supply of agricultural products. And what's worse, it will seriously impact the national economic foundation.
For more information about China Agriculture Investment Bimonthly Report, please feel free to contact us at econtact@cnchemicals.com
(Guangzhou China, September 18, 2011)
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