A tainted image because of a food scandal is one of the reasons China’s largest pork producer Shuanghui bought America’s largest meat processor Smithfield for US$4.7bn in cash. Shuanghui is trying to upgrade both management and technology, tells business analyst Ben Cavender in the Wall Street Journal.
The Wall Street Journal:
Two years ago Mr. Wan and other Shuanghui executives scrambled to contain fallout from the presence of chemically tainted meat products. He took a prominent role in containing the scandal, apologizing before the public and describing to local media how he arranged to receive daily quarantine reports.
That episode could present a public-relations headache amid broader questions about Chinese food safety, said Ben Cavender, a senior analyst at China Market Research Group, adding that U.S. consumers may want the combined company to demonstrate tight safety standards. But the deal could also help Shuanghui improve its own standards, he said.
“Chinese companies are looking for management prowess and technology upgrades when they make acquisitions,” Mr. Cavender said.
The deal would give Shuanghui a much greater foreign presence. In addition to Smithfield’s position in the U.S., the company sells meat in Poland, Romania and the U.K.
China Weekly Hangout
Thousands of dead pigs, floating earlier this year in Shanghai’s Huangpu river, illustrated how badly organized China’s food chains are. In the China Weekly Hangout Richard Brubaker, Andrew Hupert and Chris Brown discussed food security and how the ongoing problems will lead to massive food inflation. Moderation by Fons Tuinstra of the China Speakers Bureau.