Manobrando no mercado de fusões e aquisições da China
1 de janeiro de 2024 Os mega-negócios que a indústria vivenciou na era pré-COVID-19, incluindo a aquisição da Syngenta pela ChemChina, desapareceram em grande parte. Isso não significa que o mercado de fusões e aquisições esfriou. Muitas empresas chinesas continuam a explorar oportunidades para expandir suas operações e ofertas.
Agronegócio Global interviewed Yuhong Wu, Director for Agriculture Subscription Services for Kynetec in China to get her perspective on the China’s merger and acquisition market.
ABG: Como você caracterizaria o mercado de fusões e aquisições na China nos últimos anos?
Yuhong Wu: Durante o processo de fusões e aquisições de empresas chinesas na última década, o objetivo das fusões e aquisições foi principalmente triplo.
One is to deepen the commercial moat of their own enterprises. There are two ways to deepen the moat, the first is the integration of production capacity, and the other is the integration of the whole industry value chain. For example, in 2017, Limin acquired Shuangji Chemical, realizing the integration and coverage of the production capacity and market of mancozeb and dithiocarbamate fungicides in China. So Limin became the second largest supplier of such products in the world. Limin formed advantages in both production capacity and market coverage in a single category market. In 2023, Guangxin’s acquisition of Liaoning Shixing Pharmaceutical & Chemical was mainly to achieve the industry chain integration strategy.
A second direction is to expand product categories horizontally. For example, in 2021, Wynca Group invested RMB 178 million in the acquisition of Hefei Xingyu, which enabled Wynca to move forward from glyphosate to oxadiazon, oxadiargyl, and bentazone, etc. In 2023, the company acquired Sinosteel Thermal Energy Jincan New Energy Technology through its wholly owned subsidiary, Zhejiang Qiyuan New Material. The purpose of this acquisition was Wynca’s preparation to penetrate into the supply chain of graphite anode materials for lithium-ion batteries in the new energy sector. This was associated with the high growth market in the new energy sector in China.
Third, Chinese companies want to expand their sales channels and increase their commercial reach overseas. The most representative case was the acquisition of Sarabia in Spain by Rainbow by the end of 2022. Through M&A, Rainbow could own the capacity of overseas factories and enhance the flexibility of global supply. At the same time, it could also acquire the experience of overseas teams for market expansion. In 2023 Xingfa Group also acquired 70% stake in Indonesia’s AMCO. This was a typical case of a Chinese company expanding its overseas formulation production capacity while looking to expand its sales channels.
ABG: What factors are driving the M&A market in China?
YW: Chinese companies’ M&A is mainly for strategy of growth. The supply market in China is now highly competitive. With the current low prices in China’s supply market, companies must have scale effects to remain profitable. The whole industry value chain integration strategy is a strategy that almost all companies are promoting. This is also what investors want to see.
Outro fator é que as empresas estão se diversificando para reduzir o risco do negócio. Faz sentido para as empresas agroquímicas expandir suas categorias de produtos. A expansão da categoria requer experiência suficiente em síntese química, que é preferida pelas empresas agroquímicas. Como o Wynca Group tem recursos minerais, eles podem se expandir para novos materiais de eletrodo negativo do setor de energia. Como os minerais exigem uma operação de capital enorme, apenas as empresas listadas podem ter tal força. Depende de que tipo de vantagens estratégicas a empresa tem.
Por outro lado, vale mencionar que os canais são a fraqueza das empresas agroquímicas chinesas. Isso está relacionado ao seu modelo de negócios nas últimas décadas. No entanto, estamos felizes em ver que algumas empresas começaram a considerar capitalizar em canais de vendas internacionais. Empresas japonesas como Mitsui e ISK estão na posição de liderança para layout de canais. As empresas chinesas precisam de mais tempo para explorar o canal internacional e, mais importante, como gerenciar suas equipes no exterior.
ABG: We’re all familiar with the Syngenta/ChemChina relationship. Are Chinese crop input companies exploring companies outside China to merge or acquire? Why or why not?
YW: Acredito que essa seja uma escolha inevitável para as empresas chinesas. Em 2023, vemos que o desempenho das empresas chinesas está geralmente sob grande pressão. Sob pressão, as empresas devem mudar. No entanto, as empresas chinesas têm muito pouca escolha em mãos. Elas estão cada vez mais percebendo a necessidade de canais no exterior, bem como instalações de produção.
Claro, empresas chinesas também estão considerando barreiras tarifárias comerciais. Por exemplo, a Indonésia é um bom lugar para localizar instalações de produção para todo o mercado da ASEAN e até mesmo para o mercado australiano. O México é um candidato ideal para uma base de produção para o comércio norte-americano. Colômbia e América Central têm uma afinidade natural com o mercado sul-americano.
Not only that, but overseas M&A also requires the right partners. Chinese companies need overseas partners to leverage China’s advanced manufacturing to drive growth. The choice of overseas partners is the bottleneck for Chinese companies in overseas M&A.
ABG: What size companies seem to be involved in M&A activities (large, medium, small) and why do you think that is?
YW: At present, the M&A of Chinese agrochemical companies are mainly concentrated within the scope of listed companies. The leading companies have financial advantages. And they can afford professional M&A consulting services. Chinese companies increasingly need specialized services in M&A. At the same time, only the head enterprises have such talent attraction. However, it also requires a personal appeal on the part of the company’s leaders in order to gain the assistance of talents.
Claro, não estamos dizendo que não há oportunidades para empresas de médio e pequeno porte em futuras fusões e aquisições. Talvez a maior força das PMEs (pequenas e médias empresas) esteja na inovação. Não apenas empresas chinesas, mas também corporações multinacionais atualmente licenciam inovação principalmente por meio de fusões e aquisições externas. Portanto, acho que as PMEs têm mais probabilidade de ser alvo de fusões e aquisições do que objeto de fusões e aquisições.
ABG: We heard a great deal about China’s Double Control and Environmental policies. Can you briefly describe what the government’s reason was behind those policies?
YW: It was very similar to China’s 2017 environmental storm. China’s 3060 carbon neutral target is an ongoing policy. In China, the influence of policy on the industry is huge. However, the introduction and implementation of new policies require feedback from practice. There is a famous saying in China, which was put forward by Mr. Deng Xiaoping, the pioneer of China’s reform and opening up, that: “Practice is the only standard to test the truth.” Therefore, China’s dual-control policy at the end of 2021 needed to be fine-tuned according to the actual situation.
The dual-control policy did bring a shock to China’s pesticide supply chain when it was just implemented. However, the government’s decision-making was adjusted at the time of the 2022 Central Economic Conference, thus leaving room for flexibility in the normal production of Chinese agrochemical companies. This was the reason why China’s pesticide supply was recovered on track in 2022.
ABG: Essas políticas tiveram o efeito desejado?
YW: As I have just mentioned, the dual-control policy is now shifting toward the “active adoption of green energy.” The energy consumption of agrochemical companies comes mainly from electricity consumption. China’s agrochemical companies will make more use of green energy. The Chinese government is actively building a new energy hub infrastructure in the northwest. If we look beyond 2060, when China will be carbon-neutral, then controlling energy consumption now is partly the beginning.
ABG: A pandemia global teve um efeito na indústria em geral. Teve um impacto na atividade de fusões e aquisições na China?
YW: The pandemic has changed the entire human race in some ways. What has changed the most is the way people view the world. People’s mentality is subtly changing. Accumulating huge amounts of wealth in a short period of time is no longer appropriate. People are more attracted to things that are down-to-earth, textured, and warm. Deep thinking between people has become more important.
Se tivermos que vincular a pandemia a fusões e aquisições, então eu diria que estamos nos tornando mais cautelosos. A era de alto crescimento econômico é coisa do passado, e as empresas estão mudando de orientadas ao lucro para orientadas ao valor. As empresas chinesas provavelmente pensarão mais profundamente sobre o valor que sua expansão cria para os agricultores, ou para a agricultura global, antes de fazerem fusões e aquisições. As empresas, assim como as pessoas, estão se tornando mais genuínas e confiáveis.
ABG: What do you see happening regarding M&A activity in the next several years (more activity, less, etc.)?
YW: In the short term, I personally don’t see large-scale mergers and acquisitions continuing to occur. At a time when growth in the agrochemical industry as a whole is sluggish, any agricultural practitioner will be more conservative.
In fact, agriculture is a very conservative sector. Farmers know best what agriculture is. There are four seasons in a year, and that’s agriculture. We need to think about the future of agriculture with a more long-term strategy. Short-term investments will be defeated by the market truth.
ABG: O que mais devemos saber sobre o mercado de fusões e aquisições na China?
YW: If I had to give an answer to this question, I would say innovation. Kynetec is a data provider. We are deep in the market. What we feel most deeply is that innovation is everywhere. The quality of Chinese companies’ pesticide products is now continuing to improve. In the Chinese market, Chinese companies pay a lot of attention to brand cultivation. This requires them to invest more money and time in R&D. Chinese companies are benchmarking the quality of their products against those of multinational companies. This shows that they are paying enough attention to innovation.
In the area of investment and M&A, I think Chinese companies have innovation as their ultimate goal. Not just products, Chinese companies may also diversify into M&A in digital platforms, agricultural services, precision ag, and agricultural infrastructure.
Receba a Newsletter hoje mesmo!
