Citizens of Nowhere

Over the past few weeks, the media have given us a welcome break from the all the drama in the White House. Suddenly there was something more interesting, and perhaps more important to talk about. On February 17, Kraft Heinz made a $143 billion takeover bid for Unilever. While possible takeovers of this size have an obvious economic impact, they increasingly trigger political responses as well. The reason is that governments are skeptical about the intentions of large foreign investment firms, these so-called ‘citizens of nowhere’. This skepticism is completely understandable, as it lies at the root of populist revolts around the world.

You have probably heard of Warren Buffett. He is generally considered one of the most successful investors of all times, currently ranked the second wealthiest person in the US. As an acknowledged philanthropist, he is also famous for taking a serious interest in “the other 99 percent”. He even has his own BrainyQuote page, with beauties such as:

It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.

Teaming up with the Brazilian private equity group 3G, Buffett was one of the investors behind the takeover bid for Unilever. Financially, Unilever is a fair company, maintaining a decent but not spectacular profit margin. Since Buffett and 3G acquired Kraft Heinz they have managed to raise its margin by 10%. On average, Unilever is only half as profitable as its Anglo-Saxon competitor.

Despite Unilever’s “fairness” in terms of financial performance and Buffett’s impressive track record, the deal did not go through. Both parties claim to have withdrawn the bid in a friendly fashion, but there was probably more going on. Governments are more vigilant when it comes to hostile takeovers than a decade ago. They have good reason to be, because it is precisely this cold-hearted kind of capitalism that has caused so much anger not only amongst employees of the companies involved, but also the public at large. People are fed up with these citizens of nowhere who show up unannounced, shake up management, cut costs, initiate forced layoffs, and walk away with their pockets filled – all in the name of maximising shareholder value.


Luckily, resistance against this short term winner-takes-all mentality is rising. The media have framed the political reaction in terms of economic nationalism, with Trump’s administration in the vanguard. However, I think this debate is going in the wrong direction. The political response to the Unilever case, for example, has not so much to do with protecting jobs in the Netherlands or the United Kingdom (or wherever Unilever’s employees are stationed). Instead, it is about standing up for a more sensible kind of capitalism, where the non-financial performance of a company – such as sustainability, happiness of employees, etc. – matters just as much as generating enough value for shareholders. Unilever is regarded as one of the most sustainable companies in the world, as it takes its ecological footprint very seriously. Surely this is worth fighting for. Heinz Kraft on the other hand, ranks a dismal #472 on Newsweek’s Green Rankings.

In times of rising populist sentiment, the barbarians at the gate are not refugees. Nor is it globalisation itself. The real cause of many of our problems is often covered in smoke, propagated by extremely wealthy people, and gone before you realise it has arrived. Beware: the Citizens of Nowhere.


Author: Felix den Ottolander

Owner of China Hand (

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