Will You Buy Smithfield Farms Pork After It Becomes Chinese?

 What Do Chinese Restaurants In America Have To Do With This?

By Dan Harris on June 1st, 2013Posted in China Business

China CSR recently did a story entitled, Chinese Purchase Of American Pork Company Fuels Quality Concerns, regarding Chinese company Shuanghui International Holdings’ recent purchase of Smithfield Foods.  Smithfield’s president and chief executive officer had nothing but good things to say about the merger:

We have established Smithfield as the world’s leading and most trusted vertically integrated pork processor and hog producer, and are excited that Shuanghui recognizes our best-in-class operations, our outstanding food safety practices and our 46,000 hard-working and dedicated employees. It will be business as usual — only better — at Smithfield. We do not anticipate any changes in how we do business operationally in the United States and throughout the world. We will become part of an enterprise that shares our belief in global opportunities and our commitment to the highest standards of product safety and quality. With our shared expertise and leadership, we look forward to accelerating a global expansion strategy as part of Shuanghui.

Will Smithfield continue operating just as it always has?  Of course not.  A Chinese company cannot possibly operate an American company the exact same way it was previously operated when American-owned. The more important questions though are the following:

• Will the quality or safety of Smithfield’s food decline?

• Will the American public keep buying Smithfield’s food as before, or will food safety concerns cause a sales decline?

The ChinaCSR notes how “chatter on Twitter and other websites today shows some Americans are worried this may not be good for some stakeholders, especially consumers who know about China’s struggle to enforce higher food safety standards” and it then goes on to detail various ways Chinese food companies have compromised food safety in an effort to increase profits.

The other day, I was talking with a Chinese-American foodie friend of mine about Chinese versus Thai restaurants in America.  He started the conversation talking about how bad most Chinese restaurants are in Seattle.  I then talked of how I have always found it interesting how about 80 percent of Chinese restaurants in America are mediocre or bad, about 20% are okay to good, and so few are great.  I then noted how the ratio for Thai restaurants is so different, with about 90 percent being okay to good and maybe 5 percent being great and 5 percent being bad.  I then posited my two reasons I saw for this disparity. One, Chinese food requires greater cooking expertise than Thai food, which is more spice-based. Two, Americans generally expect Chinese food to be super-cheap and that in and of itself dooms the food to mediocrity.  My friend immediately responded by saying I was being “too kind” and that the “only reason” for this disparity was that “Chinese have no compunction about selling people shit and the Thais do.”

I disagree with him, but since at least some in the US apparently feel as he does, I have to wonder what that will mean for Smithfield foods. What do you think? What about food safety? Any increased risk there?  And while you are at it, what about Volvo and other companies purchased by China?

UPDATE:  Is this deal really Chinese at all?  China First Capital makes a pretty persuasive argument that it is not.