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Abstract

In 2013, Smithfield Foods Inc., the world’s largest pork processor, was acquired by Shuanghui International Holdings Ltd, China’s largest pork producer. The $4.7 billion acquisition marks the largest Chinese takeover of a U.S. company in history. After the acquisition, Virginia-based Smithfield became a subsidiary of Shuanghui International Holdings. In this study, we investigated how US consumers responded to the Chinese acquisition of Smithfield. We found that US consumers are willing to pay significantly more for the US brands compared to the Chinese brands. The US consumers’ willingness to pay for Smithfield products decreased significantly after they learned about the Smithfield-Shuanghui acquisition, especially for risk averse consumers and those with higher education level. Furthermore, contrasting to the results in the Chinese market, we did not find a negative spillover effect of this acquisition on other US products in the US market.

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