American public response to the Shuanghui acquisition of Smithfield Foods and the neural foundations of this reaction
The Shuanghui-Smithfield acquisition, the largest Chinese takeover of a US company in history, has had a mixed impact on consumer preferences for American and Chinese brands in the US market.
Since the acquisition in 2013, American farmers and some consumers have expressed concerns about the ownership shift. Economic pressures have been felt, with fewer profits flowing back to American producers as Smithfield's revenues are now controlled by Chinese interests. This concentration of profits and ownership may have subtly but persistently impacted consumer preferences, making some American consumers more cautious or skeptical about products labeled with the Smithfield brand.
Despite ownership change, Smithfield Foods continues to be a major player in the US pork market. Its familiarity and established reputation mitigate some potential loss of consumer confidence. However, awareness of Chinese ownership has sparked debate about food safety, environmental practices, and animal welfare under Smithfield’s operations, which likely influences consumer preferences toward scrutinizing brand origins more carefully.
Contrary to expectations, the immediate effect of the acquisition did not translate into increased consumer preference for Chinese brands in the US market. Instead, it has led to discussions about national origin and control of food supply chains. Consumers often remain loyal to familiar American brands but may adjust preferences based on perceptions of safety, quality, and ethical concerns arising from foreign ownership.
The deal also raised political and regulatory scrutiny, reflecting broader sensitivities about Chinese investment in US agriculture. These responses influence consumer sentiment and brand positioning, making the long-term effect less about changing consumer preference toward Chinese brands and more about increased awareness and caution around foreign ownership.
A recent study used electroencephalography and an incentive compatible willingness-to-pay (WTP) elicitation mechanism to explore the impact of the Shuanghui-Smithfield acquisition on consumer preferences. The study found that consumers' neural preference for American brands increased after learning about the acquisition. Interestingly, it also found that consumers' neural preference for Chinese brands increased after learning about the acquisition. This suggests a complex interplay of factors influencing consumer preferences.
Despite the decrease in neural preference, consumers' willingness-to-pay increased after learning that an item is a product of the United States, despite the increase in neural preference for Chinese brands. This indicates a potential disconnect between consumers' emotional responses and their actual purchasing decisions.
The study also found a positive spillover effect to US brands in the US market due to the Shuanghui-Smithfield acquisition. This could be due to increased scrutiny and consumer caution around Chinese brands, leading to a greater appreciation for familiar American brands.
In summary, the Shuanghui-Smithfield acquisition has contributed to heightened consumer sensitivity regarding foreign ownership of American brands, potentially dampening enthusiasm for Chinese brands while maintaining Smithfield’s brand strength under Chinese control. It has reinforced a divide in consumer preference shaped by economic-nationalist concerns rather than a wholesale shift toward either American or Chinese brands in the pork sector.
[1] Economist, "The Pork Barrel," 2014 [5] New York Times, "China's Biggest Deal in the U.S. Yet: A Pork Producer," 2013
- Media analytics studies have highlighted the complexity of consumer preferences in the US market, with the Shuanghui-Smithfield acquisition leading to a greater focus on food safety, environmental practices, and brand origins, which may influence consumers' purchasing decisions.
- The integration of facial coding technology in media analytics could offer insights into the emotional responses of consumers toward American and Chinese brands post-acquisition, providing a more nuanced understanding of the interplay between brand reputation, foreign ownership, and consumer preferences in the US market.
