In the biggest acquisitions ever of a US company by a Chinese one, Shuanghui International Holdings has agreed to buy Smithfield Foods Inc, the world's largest producer of pork. It's a fascinating purchase, and not just because of its huge size and the involvement of bacon. The deal is the most visible manifestation of a smorgasbord of trends, the LA Times observes. Trends like...
- China Demands Meat. Tastes are changing in China, with the burgeoning middle class hungry for the flesh of mammals. Back in 1978, the US ate three times as much meat as China; now, China eats twice as much meat as we do. (Although, remember, China's population is huge, so America is probably ahead per capita.)
- Especially Pig. The Chinese gobbled up almost half of all the pork on earth in 2010, roughly 51 million metric tons. The US ate 9 million metric tons.
- China's Skittish About Its Own Food. Given the number of food safety scares it's suffered, foreign meat is expected to sell at a premium. Shuanghui owns a meatpacker that was itself embroiled in a pork-related scandal in 2011, and analysts believe it's acquiring a trusted foreign brand to restore confidence.
- China's Taking Over Agriculture. This deal is just the flashiest move in a decade that has seen Chinese companies buying huge amounts of acreage globally, getting footholds into the production of key staples. "Chinese companies want more control over food," one expert says. "We're going to see a lot more deals like this."
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