Senators debate Shuanghui buyout

Updated: 2013-07-12 02:13

By Joseph Boris in Washington (China Daily)

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US lawmakers on Wednesday got their first chance to debate a Chinese company's proposed takeover of pork processor Smithfield Foods Inc, with most expressing apprehension about the deal's impact on US food supplies, agricultural exports and cross-border transfer of sensitive technologies.

The Senate Committee on Agriculture, Nutrition and Forestry heard from two foreign-trade experts who said the purchase by Shuanghui International Holdings Ltd would be good for China and, in the short term, Smithfield shareholders and executives, but bad for the US economy and the nation's consumers.

Smithfield CEO C. Larry Pope defended the deal in testimony to the committee, saying his company would continue to adhere to strict US food-safety standards while expanding in China's important export market.

"We have a saying: It will be the same old Smithfield, only better," Pope said, reiterating his and Shuanghui's claims that what would be the biggest Chinese acquisition of a US company is all about boosting exports to help satisfy huge demand for pork in the world's second-biggest economy.

"There should be no noticeable impact on how we do business operationally in America and around the world as a result of this acquisition, except that we plan to do more of it," he told senators.

Pope also said the transaction stands to benefit US farmers and agriculture and that a Shuanghui-owned Smithfield would retain the Virginia-based hog processor's existing supply contracts, plants, management — including the CEO — and workers, including union contracts.

Before Wednesday's hearing, the North Carolina Department of Agriculture and Consumer Services and the North Carolina Pork Council commented about a recent joint meeting in Central China's Henan province with Shuanghui Chairman Wan Long. According to them, Wan reaffirmed his commitment to retaining Smithfield's management, operations and employee agreements, and to upholding company safety standards.

Pope was questioned by one Agriculture Committee member about whether those commitments by both companies were binding or would "go away" after the deal is finalized. Pope said they were enforceable under US law and that Shuanghui would have "no choice" but to honor them.

That senator, Democrat Heidi Heitkamp of North Dakota, added, "There is a fair amount of cynicism and concern about this transaction and part of that is borne out of concern for what's going to happen to the intellectual property of this company."

That reference, also made by other senators, was to Smithfield's valuable technology, particularly in the field of hog genetics and breeding. But a committee Republican, Senator John Boozman of Arkansas, said fears of a loss of US competitiveness or control to a Chinese producer may be exaggerated.

Pork production is "a pretty stable industry", he said. "There's not a great mystery in the feed mix" or in hog genetics that would give China, through Shuanghui, a major advantage.

Boozman also dismissed as irrelevant the observation from some committee colleagues and hearing witnesses that an inversion of the deal — Smithfield buying Shuanghui — wouldn't be possible. The US government and American companies do business with many countries that don't reciprocate the United States' wide market access, he said.

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