Impact of Cross-Border Acquisition on Consumer Willingness-to-Pay: The Case of Shuanghui-Smithfield Acquisition

14 Pages Posted: 9 Feb 2017 Last revised: 9 Apr 2017

See all articles by Shaosheng Jin

Shaosheng Jin

Zhejiang University

Yan Zhang

Zhejiang University - School of Management

Yu Yvette Zhang

Texas A&M University

Marco Palma

Texas A&M University - Department of Agricultural Economics

Date Written: February 3, 2017

Abstract

The $4.7 billion acquisition of Smithfield Foods, Inc. by China’s Shuanghui International Holdings Ltd. (now WH Group Ltd.) marks the largest Chinese takeover of a U.S. company in history. In this study, we explored how this acquisition affected consumers’ willingness-to-pay for meat products in China by conducting incentive compatible second price auctions, before and after the regulation approval of the acquisition. Our results suggest that Chinese consumers were willing to pay significantly more for US products than similar domestic products, plausibly due to food safety concerns. We found that the Shuanghui-Smithfield acquisition significantly increased Chinese consumers’ willingness-to-pay for Chinese products, but decreased their willingness to pay for US products.

Keywords: Cross-border acquisitions, Consumer Willingness-to-Pay, Product of USA, Meat products, Food safety, Experimental auctions

JEL Classification: D12, D44, G34, Q13

Suggested Citation

Jin, Shaosheng and Zhang, Yan and Zhang, Yu Yvette and Palma, Marco, Impact of Cross-Border Acquisition on Consumer Willingness-to-Pay: The Case of Shuanghui-Smithfield Acquisition (February 3, 2017). Available at SSRN: https://ssrn.com/abstract=2911186 or http://dx.doi.org/10.2139/ssrn.2911186

Shaosheng Jin

Zhejiang University

38 Zheda Road
Hangzhou, Zhejiang 310058
China

Yan Zhang

Zhejiang University - School of Management

Hangzhou, Zhejiang Province 310058
China

Yu Yvette Zhang (Contact Author)

Texas A&M University ( email )

College Station, TX 77843
United States

HOME PAGE: http://agecon2.tamu.edu/people/faculty/zhang-yvette/

Marco Palma

Texas A&M University - Department of Agricultural Economics

College Station, TX 77843
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
68
Abstract Views
642
rank
370,401
PlumX Metrics