Smithfield to cut additive to boost exports to China

Updated: 2013-10-11 07:47

By Bloomberg News (China Daily)

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Shuanghui to keep US firm's brand and management unchanged, factories open

Smithfield Foods Inc, the world's largest hog producer, said it will reduce the use of a feed additive that makes pork leaner as it seeks to win more business in China.

The United States-based company, acquired by Hong Kong-based Shuanghui International Holdings Ltd in a $4.7 billion deal last month, has the capacity to ship "large quantities" of ractopamine-free pork to China, Chief Executive Officer C. Larry Pope said in an interview on Wednesday in Hong Kong. China bans the use of the additive.

Smithfield's takeover by Shuanghui, the largest Chinese purchase of a US company, will help boost China's import of pork, which may climb to 1.39 million metric tons, according to the US Meat Export Federation. Shuanghui will promote Smithfield products and brands to Chinese customers, Shuanghui Chairman Wan Long said in the same interview.

Smithfield to cut additive to boost exports to China

C. Larry Pope, president and chief executive officer of Smithfield Foods Inc, left, and Wan Long, chairman of Shuanghui International Holdings Ltd, at a news conference in Hong Kong on Thursday. Shuanghui will not close Smithfield factories, Wan said. Provided to China Daily

"Our top priority now is to expand the trading of Smithfield and to expand the export market," Wan said on Thursday at a news conference in Hong Kong. "There's a huge potential for the export of US pork to outside of the United States."

Shuanghui will keep Smithfield's brand and management unchanged, and there won't be any factory closures, Wan said.

Increased demand

The purchase drew criticism from some US lawmakers who raised concerns that it may transfer food-safety issues from China to the US. The bid for Smithfield underscores the increased demand for meat, particularly pork, from China's expanding middle class.

About 40 percent of Smithfield's production is ractopamine- free, Pope said. "We have the ability to expand that," he said.

While Smithfield's exports to China have been mostly offal, parts shunned by US shoppers, the company will boost exports of higher-priced cuts of meat, Pope said.

"The merger's objective is to go beyond the offal into the muscle meat," he said, adding that the company has been selling prime cuts to Shuanghui for nearly a year.

Wan also said the company had no specific plans for a stock exchange listing. Shuanghui International has a listed unit in Shenzhen called Henan Shuanghui Investment & Development Co.

"There's tremendous work" to be done after the merger, Wan said on Thursday. "An IPO is a good thing and we hope to get listed, but it needs to wait until the opportunity is right."

(China Daily 10/11/2013 page17)

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