That’s an understatement, as China’s Shuanghui acquires Smithfield Foods:
Shuanghui International Holdings Ltd., China’s biggest pork producer, agreed to acquire Smithfield Foods Inc. (SFD) for about $4.72 billion to boost supplies for the nation that’s the biggest consumer of the meat.
Closely held Shuanghui, parent of Henan Shuanghui Investment & Development Co. (000895), will pay $34 a share for the Smithfield, Virginia-based producer, both companies said today in a statement. The offer is 31 percent more than yesterday’s closing share price.
When I was doing business in China in the early 1980’s, one of the many things I discovered about the place was that the drilling rigs in the BoHai (the sea east of Beijing) were also places where the Chinese raised pigs. One American associate quipped that the Chinese had “a pig a rig”. Not to be outdone, when I visited the Soviet Union later in the decade I was taken to a scientific and engineering research institute where they too raised pigs on the side.
Except in Jewish and Muslim places, pork has been a staple meat for millennia, because pigs are efficient (if not particularly graceful) converters of what they eat into what they become ,i.e. meat. Both the Russian and Chinese revolutions took places in largely rural countries where people thought nothing about resuming their food raising wherever they were at, and that included drilling rigs (and I presume production platforms were not immune to this) and research institutes. Marxist-Leninist economies were (and are in the case of places like North Korea and Cuba) notoriously poor distributors of goods and services, really by design, so economic activity on the side is a must in places like this.
This move shows how far the Chinese have come in a short period (in their terms). Let’s hope that their commitment to quality (something they surely expected from us in the day) is commensurate with their business acumen.