Business Impact

In a Move to Acquire Syngenta, China Means Business with GM Crops

A state-owned chemical corporation’s $43 billion proposed acquisition reflects the country’s sizable concerns about food security.

Feb 3, 2016

Behind the biggest-ever foreign acquisition by a Chinese firm is one of the most daunting challenges the country faces: it must secure its food supply and feed 1.5 billion people despite a shortage of viable farmland. Today's announcement that state-owned ChemChina plans to spend $43 billion to purchase Syngenta, the Swiss firm that makes pesticides and seeds, is an acknowledgement that technology—in particular genetically modified crops—will be needed to achieve that.

China has been a net food importer since 2008, and agricultural yields have been flat for a decade and a half after tripling between the 1960s and 1990s. The country is home to 21 percent of the world’s population but less than 10 percent of the globe’s arable land. And much of it is in bad shape thanks to soil contamination. Climate change threatens to eat further into agricultural yields.

The pressure to produce more food is driving a massive domestic research effort to investigate and develop GM crop technology. And President Xi Jinping has called on his country to “boldly research and innovate, [and] dominate the high points of GMO techniques.” Purchasing one of the world’s dominant agriculture technology companies, then, is more than just a business deal.

Syngenta headquarters in Basel, Switzerland.

(Sources: Bloomberg, Reuters, The New Yorker)