If you're feeling antsy
over Tnuva's changing hands, go drink a glass of milk and relax. Tnuva
has not been an Israeli-owned company for years. British investment firm
Apax Partners is a major holder, and the principal damage that Israelis
have incurred by its foreign ownership is the steady rise in the prices
of its products that aren't under government regulation.
I'm expecting Tnuva to
continue to produce in Israel, not because manufacturing here is
cheaper, but because it is more complicated to set up dairy farms in
China and fly fresh dairy products to Israel from halfway around the
globe. I find it hard to believe that the Chinese are buying Tnuva to
pull production from Israel.
They are certainly
acquiring much knowledge and growth, so from their perspective it's a
very good deal. Food supervision in Israel is very high, so I don't see
much reason to worry over that either.
The main fear is that
if the Israeli government attempts to open the dairy market to mass
competition, it could one day encounter serious pressure from Beijing.
It is difficult to imagine, even given such considerations, some kind of
serious Chinese annoyance. As if pressure against opening up the market
to greater competition does not exist already. Actually, the
agricultural lobby and their ingratiated government committees have made
sure to keep cream expensive enough as is.
China itself is an
economic power. It owns more U.S. debt than any other country. I can
recall former U.S. Secretary of State Hillary Clinton's visit to China,
when she asked the Chinese government to continue buying U.S. bonds. The
economic output in China is about the same as the U.S. So if you're
trying to do more business with China -- and I believe we need to do
more business with China -- then you can't really complain the morning
after the Chinese come knocking on your door with checkbook in hand.
This deal is, in the
end, quite a compliment for the Israeli economy. The willingness to
spend billions on Tnuva makes a positive statement about the
innovativeness of Tnuva's management and workers, who have helped
develop the company into something lucrative.
What is too bad in every such
story is that Apax managed to exit with a financial win, while the state
won't get much of anything tax-wise out of the deal. And yet, it's
still better to be a Western country with attractive assets to sell --
indeed, they're being sold -- than a crumbling Middle Eastern country
with a robust regulatory system that chases foreign investors away --
even if it's the Chinese government.
Comments
Post a Comment