Shuangui International made news yesterday after announcing its $4.7 billion buyout of Smithfield Foods, which is poised to become the largest-ever Chinese takeover of a U.S. company. US consumers have been left concerned about their meat supply.
Smithfield emphasized that the deal was intended to deliver more pork to China and to learn the health standards used by Smithfield in order to regain trust from Chinese consumers following recent food safety concerns. Nevertheless, the buyout has prompted concern about China's expanding role in the American food supply and the implications that might have for food safety in the United States.
"We are importing more and more food from China at the same time we are hearing more and more about food scandals involving Chinese companies," said Patty Lovera, assistant director of Food and Water Watch who testified in Congress at a hearing on Chinese food imports, the New York Times noted.
Food safety concerns, like mercury found in baby formula, rat meat that was doctored with gelatin, pigment and nitrates and sold as mutton, and around 16,000 dead pigs were floating in Huangpu River leaving consumers feeling uneasy with the products being sold.
However, there is a growing demand for more protein sources as the country becomes wealthier. China's meat consumption would still need to rise about 8% from last year's level just to catch up to South Korea's, according to the United Nations' Food and Agriculture Organization.
Shuanghui's acquisition of Virginia-based Smithfield Foods will face scrutiny by the Committee on Foreign Investment in the United States (CFIUS), a government panel that assesses national security risks.
The proposal is the largest in more than a decade of Chinese ventures to snap up food companies abroad. Other purchases have included state-owned Cofco Corp. buying Australian sugar producer Tully Sugar Ltd. last year for about $140 million, and Shanghai-based Bright Food (Group) Co.'s 2011 purchase of Manassen Foods Australia Pty. Ltd. for an estimated $522 million including debt.
