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Benefits of meat deal

Updated: 2013-05-31 11:18
( China Daily)

The $4.7 billion deal to buy US meats icon Smithfield Foods that China's Shuanghui International announced on Wednesday represents more than a smart business decision.

To meet the soaring appetite for pork and other high-quality meats in the world's most populous country, such an effort to lock in a strong supply of pork for the Chinese market is obviously long overdue.

However, as one of the largest-ever Chinese purchases of a US company, it seems likely that the deal will also be a lightening rod for the strength of US protectionism.

The memory is still fresh of China National Offshore Oil Corporation's failure to buy Unocal Corp for $18.5 billion in 2005 due to US political pressure.

Ongoing US opposition to thwart the expansion of Chinese technology companies, such as Huawei and ZTE, also does not bode well for cross-border deals.

Hence, even the conspicuous absence of national security factors in this friendly takeover can hardly guarantee that US protectionists will not poke their nose into it.

Yet, not only for the benefits to the two companies, but also for the broader interests of China-US trade and investment growth, we would like to urge the US officials who will review the deal to do so on the basis of solid facts instead of fantasy security concerns.

For the two companies involved, this is clearly a win-win deal, as is evidenced by the response of the stock markets.

Besides securing access to US pork, this acquisition may enable Shuanghui to import Western farm and food standards and environmental practices to revamp its reputation in the domestic market where it has been damaged by food-safety scandals. This is something that will be warmly welcomed by Chinese consumers.

Meanwhile, the deal will be a boon for US farmers as they will be able to explore the Chinese market where demand for US meat has risen 10-fold over the past decade.

For China, which is struggling to boost its domestic consumption as a new growth engine, and the US, which is trying hard to rev up exports to fuel its economic recovery, the deal is clearly good news and there is really no reason to allow protectionism to foil it.

Benefits of meat deal

Benefits of meat deal

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