The world’s biggest pig farmer and pork processor, U.S. based Smithfield Foods, is being taken over by China’s largest pork products company, Shuanghui Group. And while the $4.7 billion deal will give the Chinese group a major foothold in the U.S. food industry, it looks like the bigger story is the way it will be used to bring the American brand to China, where food safety concerns are high and consumers place high levels of trust in Western products.
 

  

Consider this language used by Shuanghui chairman Wan Long in the announcement of the deal: “Together we will be able to meet the growing demand in China for pork by importing high-quality meat products from the United States, while continuing to serve markets in the United States and around the world.” It’s pretty clear what the priority is.

 

While Smithfield has drawn plenty of heat from animal rights activists and food campaigners over the practices at its industrial farming and meat processing operations at home, that’s nothing compared to the various food scandals that have hit China in recent years, ranging from deadly tainted infant formula to exploding watermelons and counterfeit eggs made of paraffin wax. Shuanghui itself has been caught up in the scares, taking a hit to its reputation after a high-profile court decision.

 

Shuanghui's bid follows other companies that have moved to tap the U.S. market, which in many industries offers higher profit margins and the opportunity for more operational know-how that Chinese companies can use in other markets. Chinese leaders have also encouraged investment abroad and the development of global brands to enlarge China's economic footprint and to help it diversify its massive hoard of foreign-exchange reserves, a result of efforts to control the value of China's currency.

 

According to research firm Rhodium Group, Chinese investment in the U.S. will likely hit a new high this year, following a record year in 2012 with deals worth more than $6.5 billion. As of the end of April, transactions worth around $10 billion were pending or under negotiation, Rhodium said. Many of the Chinese companies involved are privately held, like Shuanghui, as opposed to the big state-owned enterprises that often act on behalf of Beijing on the international stage.

 

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