If it goes through, Shuanghui International’s $4.7 billion bid to take over Smithfield Food Inc., the U.S.’s leading pork producer, would be the biggest-ever acquisition of a U.S. firm by a Chinese company.
Shuanghui certainly offers mouth-watering market access for Smithfield: In 2012, the China pork trade produced 50 million tons of meat, nearly half the world’s total pork production.
And Smithfield’s announcement Wednesday of the planned takeover came amid increasing and often-shocking food safety scandals that have left many Chinese unwilling to take a chance on homegrown products.
China’s unregulated slaughterhouses are often run by criminal gangs and protected by corrupt officials, according to reports.
Last month, Radio Free Asia posted a video of an illegal nighttime slaughterhouse in Shenzhen. In the video, a restaurant owner in the city tells RFA, “When a slaughterhouse buys pork, some pigs are still alive. Others are already dead. They’re not all dead. The dead ones are cheaper.”
China’s inability to manage its teeming swine population was underscored in March, when an estimated 16,000 pig corpses were pulled from the Huangpu River, a source of drinking water for Shanghai.
According to Shanghai agriculture authorities, most of the pigs likely fell victim to a porcine circovirus outbreak in rural Jiaxing (Zhejiang Province). Farmers there admitted they dumped their dead pigs in the river because they couldn’t afford to dispose of them properly.
Since the Huangpu pig float, dead pigs have also been discovered floating in rivers in Shandong and Sichuan provinces.
Diseased and dead pigs have been known to make their way into the food supply in China.
In early May, two government-employed persons in Zhangzhou were arrested for purchasing and selling 40 tons of diseased pig corpses to meat processing plants.
Benjamin Kessler is a contributing editor of the FCPA Blog and editor of the China Compliance Digest.
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