Chinese company Shuanghui has offered to purchase American pork producer Smithfield for $4.7 billion. It is the largest proposed Chinese takeover of an American company in history.
Protein And Pork
Traditionally, the Chinese diet has consisted of rice and vegetables, but the growing Chinese middle class increasingly has an appetite for pork.
Chinese pork consumption is rising 1 to 2 percent a year, and annually makes up for about 80 pounds per capita, versus 59 pounds per capita in the United States.
Chinese farmers have been unable to keep up with demand, so Chinese pork sellers are looking elsewhere.
That’s where Smithfield comes in. The largest American producer of pork and pork products — including brands Eckrich and Armour — Smithfield makes up for about 23 percent of all pigs slaughtered for production.
Some are ill at ease over such a large acquisition by China.
There are concerns that Chinese companies are attempting to undermine American competitiveness, but more pressing are potential threats to national security.
The proposal must undergo the government panel Committee on Foreign Investment in the United States, or CFIUS, to determine whether or not it poses a threat to national security.
Americans are on high alert after recent allegations of cyber attacks by the Chinese on U.S. military.
However, proponents of the plan say only good can come from such a merger, which will open new markets to American farmers.
Health And Hogs
One good thing for the Chinese population is Smithfield’s health record.
Chinese consumers would have access to pork that undergoes stricter health standards.
However, American consumers are concerned about Chinese pork entering the market. Images of dead pigs floating in the Huangpu River in Shanghai are still fresh on some minds.
Shuanghui had to recall pork two years ago when it tested positive for banned substance clenbuterol, which is used to produce leaner meat.