RICHMOND, VA (WWBT) - Now that Chinese company Shuanghui International has bought Smithfield Foods, experts predict more Chinese companies will invest in U.S. food production. China is struggling to produce enough food to feed its 1.4 billion people.
You'll remember the headlines: tainted milk, dog food, rice. Despite concerns over China's food safety problems, it's a done deal. Meat producer Shuanghui International has purchased Smithfield Foods. Now analysts believe its opening the door for more Chinese investment in more U.S. companies.
We traveled to the Heritage Foundation in Washington, DC. It's a think tank on policy issues that's been very outspoken about the Smithfield purchase.
The Foundation's China expert Dean Cheng points out Congress has blocked the Chinese purchase of companies when it raises concerns over national security, citing as an example, "They wanted to buy Unocal, a major oil company."
Concerns about food safety softened after Shuanghui announced it will not send pork from China into the U.S. Smithfield Foods sent us a statement, reading in part, "We do not anticipate any changes in how we do business operationally in the United States and throughout the world."
The U.S. Committee on Foreign Investment approved the deal.
"Now that will hopefully will lead to two things. One, a sign that the U.S. is still open for business. But two, it gives us the ability to say to the Chinese, 'Look you can buy an American company, and a famous brand at that. Why can't we buy one of yours?'" said Cheng.
Brad Haneberg is an attorney at Richmond firm Kaufman and Canoles. He helps Chinese businesses and investors buy into U.S. companies. He says foreign investment helps local companies grow and create jobs.
"They're buying our debt and they're investing in Virginia and the state has done a pretty good job of encouraging foreign investment, particularly China," said Haneberg.
He says Chinese investors like U.S. companies, food safety, and luxury products. And they don't want their money in China's state run banks.
"They want to keep their money offshore," explained Haneberg. "There's a lot of opportunities for Chinese investors in Virginia that are just beginning."
Haneberg and Cheng expect food production to be among many U.S. industries that China, and its wealth, will be interested in.
Here is Smithfield Foods written statement to NBC12 on its purchase by Shuanghui:
"This is a great transaction for all Smithfield stakeholders, as well as for American farmers and U.S. agriculture. The partnership is all about growth, and about doing more business at home and abroad. It will remain 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. There will be no closures at Smithfield's facilities and locations, and Smithfield's existing management team will remain in place. Shuanghui has pledged to maintain Smithfield's headquarters in Smithfield, Va., and to continue Smithfield's philanthropic support of community initiatives and investments in sustainability.
Shuanghui is a leading pork producer in China and a pioneer in the Chinese meat processing industry with over 30 years of history. Smithfield is a leader in our industry and 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. The acquisition provides Smithfield the opportunity to expand its offering of products to China through Shuanghui's distribution network.
With respect to agriculture, we expect this transaction to drive growth and expansion not only for our growers, but for the entire U.S. pork industry. Smithfield Foods owns over 400 hog farms and has contracts with more than 2,000 family farmers across the country. Our agreement with Shuanghui will maintain all of these contracts and arrangements. Moreover, this transaction creates a terrific opportunity through growth in exports for U.S. hog farmers to expand production to meet the growing Chinese demand."