Once upon a time, the transfer of know-how to Asian horizons consisted in moving production to enable Western companies to achieve cost reductions and to access large promising markets. Those days are over, it is now required that all the know-how, including R&D and marketing, be transferred. In a first stage reversal these are Western companies that have been acquired by capitalists from the People’s Republic of China while letting them continue to manage their business as usual. On January 5, a further step was undertaken: 

ChemChina and Sinochem announced that the activities of Syngenta, a Swiss based crop protection and seeds company, and ADAMA, an Israeli crop protection company, will be controlled by Syngenta Group, a rearranged holding based in China. Both companies will continue their operations under their own leadership. A directorship will be formed, made of Syngenta, ADAMA and Chinese Executives.

In their communiqués, both Chinese state-owned enterprises affirm that “This move aims to further deepen the reform of state-owned enterprises and optimize resource allocation. This is also an important measure for Sinochem Group and ChemChina to further strengthen cooperation.” For many years, China’s chemical industry has been undergoing restructuring after too many companies, more or less safe and clean, were mushrooming as a result of the migration to Asia of much of the world’s chemical industry. More recently, the acquisition of global companies such as Syngenta and ADAMA have changed the perspective from a mere cost competitive production platform to wider strategic activities at the service of the PRC at home and abroad.

In clear text, this means that both operating companies will have to follow a common strategy, as before but now in an explicit way, with directors having experience in this agricultural business; also, and as for any holding, their finances will be managed jointly.

Being in the same hands, two large companies participating together to one fourth of the global crop protection market cannot be construed as truly independent and in open competition. Thus, further so-called “remedies” can be expected to be imposed by competition authorities in most countries.

For the time being, employees in both headquarters and in R&D and production units around the World may not experience big changes. Both sales forces will compete locally, at least for a while. The ugly word of “synergy” has not yet been pronounced but sooner or later it will. Over time, being employed by companies affiliated to a Chinese multinational holding company will be a new experience of reverse colonialism which, for once, is not about opening an opium market on the Pearl River.

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