Italy That Overturned the Chinese Dining Table

Italian Court Rules Prime Minister Draghi's 'Golden Power Law' Legal
Acquisition of World's Largest Seed Company via China's Syngenta Likely to Fail

[Asia Economy Beijing=Special Correspondent Jo Young-shin] Italy, known as a pro-China country among European Union (EU) member states, has overturned the "Chinese people's dining table." The Italian court disallowed the acquisition of Verisem, a Chinese company. Verisem is a global company holding seeds of major vegetable varieties such as beans, cabbage, carrots, onions, and radishes.

[Image source=Reuters Yonhap News]

Food security is a field that Chinese President Xi Jinping emphasizes as one of the top priorities of the Chinese government. President Xi insists that the rice bowl of the Chinese people must always be firmly held in hand, and that rice bowl must be filled with Chinese grains. This ruling has put a brake on Xi's food security policy.

According to Chinese media including Global Times on the 15th, the Italian court ruled that the Italian government's veto against the acquisition of the Italian vegetable seed production company Verisem by Syngenta, a China-based company headquartered in Switzerland, is valid.

Syngenta is the world's largest agrochemical company with an 8% market share in the seed market, and ChemChina acquired its stake for $43 billion in 2017.

When news of Syngenta's acquisition of Verisem became known, the Italian farmers' association Coldiretti opposed it, saying that control over vegetable and herb seeds could fall into Asia (China).

In response to the angry farmers, Italian Prime Minister Mario Draghi exercised his veto based on the "Golden Power" law, and Syngenta filed a lawsuit to invalidate the veto. This law provides grounds to prohibit foreign investments that pose a threat to national security. It currently applies to finance, insurance, energy, transportation, food, semiconductors, and other sectors.

After the court ruling, Syngenta expressed disappointment with the court's decision, Reuters reported citing Global Times.

Global Times also argued that although China's seed research and development (R&D) capabilities have improved, there is still a technological gap with global companies, and even if Verisem is acquired, China's seed industry cannot threaten the global market.

Li Xinhai, director of the Institute of Biology at the Chinese Academy of Agricultural Sciences, said, "In recent years, China's seed industry has actively promoted overseas expansion, but the technological innovation system, including intellectual property rights, is still significantly lacking."

Zhao Junjie, a researcher at the Chinese Academy of Social Sciences, expressed dissatisfaction, saying, "The Italian court's ruling to disallow the acquisition of Verisem is unconvincing," and "Geopolitical pressure influenced a normal corporate merger and acquisition (M&A)." He added, "If Italian companies with intellectual property rights combine with Chinese companies and increase their financial power, they can grow even more."

Global Times warned that the Italian government's exercise of veto power over M&A will result in hindering win-win cooperation between companies of the two countries.

Last year, Prime Minister Draghi also rejected an M&A based on the Golden Power law when China Shenzhen Investment Holdings attempted to acquire a semiconductor equipment company located in Milan.

Meanwhile, on the 11th, President Xi visited the Yazhou Seed Laboratory in Sanya, Hainan Province, encouraging researchers by saying that holding independent seeds firmly is essential to protect the Chinese people's rice bowl. In December last year, at the Central Rural Work Conference, President Xi also emphasized food security, stating, "The rice bowl of the Chinese people must always be firmly held in hand, and that rice bowl must be filled with Chinese grains."

China is known to import about 60,000 tons of seeds annually.

This content was produced with the assistance of AI translation services.