US consumer reactions to China's Shuanghui acquisition of Smithfield Foods and its neural basis

Abstract

The $4.7 billion acquisition of Smithfield Foods by China's Shuanghui International (now WH Group) marks the largest Chinese takeover of a US company in history. Using electroencephalography along with an incentive compatible willingness-to-pay (WTP) elicitation mechanism, our study provides neural based evidence that the Shuanghui-Smithfield acquisition lowered consumers' preference for the Smithfield brand, but increased it for the Chinese brand.Consumers' neural preference for American brands increased after learning about the acquisition, implying a positive spillover effect to US brands in the US market. We also find that, after learning that an item is a product of the United States, consumers' neural preference decreased although their willingness-to-pay increased, consistent with some empirical reports that many US consumers prefer to purchase cheaper products made abroad rather than products of the United States with higher prices. K E Y W O R D Sconsumer willingness-to-pay, cross-border acquisitions, EEG, meat product, neural preference

How country of origin influences Chinese consumers' evaluation of imported milk?

“…Therefore, the BDM mechanism has been used widely in experimental economics and in the domains of agriculture and marketing to measure WTP (e.g. Zhang et al , 2019). When conducting a BDM auction, a random price generator with a reasonable distribution should be considered.…”

The “indie” premium: how independent firms create product value across cultures

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“…An overview of related work (see Table 1) reveals that the majority of contributions in this area focus on the impact of mergers and acquisitions on the brand images of acquired and acquirer firms. Most of these studies investigate the topic through a country-of-origin (COO) perspective and pivot around how consumers react to changes in a brand's ownership status following its takeover by a corporation with a superior or inferior COO image (Herz and Diamantopoulos, 2017;Johansson et al, 2018;Lee et al, 2011Lee et al, , 2014Zhang et al, 2019). Others focus on the ethical implications of takeovers and their impact on the acquired firm's social responsibility (Chun, 2016;McEachern, 2015).…”

“…Most of these studies investigate the topic through a country-of-origin (COO) perspective and pivot around how consumers react to changes in a brand's ownership status following its takeover by a corporation with a superior or inferior COO image (Herz and Diamantopoulos, 2017; Johansson et al. , 2018; Lee et al ., 2011, 2014; Zhang et al. , 2019).…”

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