National Security

Chinese Pork Takeover Faces Congressional Scrutiny

In the largest Chinese acquisition of an American company, the Shuanghui Group said it would buy the nation’s largest pork producer for $4.7 billion. But not so fast, says Congress. Josh Rogin reports.

The congressman whose district hosts America’s largest pork producer on Tuesday called for an investigation into a Chinese company’s bid to take it over.

Virginia Republican Rep. Randy Forbes represents the district where Smithfield Foods is headquartered and has its largest base of operations. Last week China’s Shuanghui Group announced it was planning to acquire Smithfield for $4.7 billion, which would make the deal the largest ever Chinese acquisition of an American company.

Forbes, a co-founder of the Congressional China Caucus and an avowed hawk on China, said Tuesday that the deal poses a threat to U.S. food security and U.S. national security, and he expressed skepticism that the Chinese would uphold American standards for food quality.

“I’m very concerned about the Chinese purchase of Smithfield for a host of reasons,” Forbes told a group of reporters over breakfast Tuesday. “Anytime we lose a company of that size with that share of our food market, it is enormously concerning to me.”

American control over domestic food supplies is a national security issue and a major concern, he said.

“I’ve been concerned for a long time that we could wake up one day and be as dependent on foreign food as we are today on foreign oil, and we should never be in that position,” said Forbes. “I’ve seen that as a national-security issue for some time.”

Asked if he would refer the Smithfield Foods case to the Committee on Foreign Investment in the United States (CFIUS), an interagency body that determines the national-security implications of foreign acquisitions of U.S. corporations, Forbes said his office would look into the issue more before taking more formal steps.

“At this particular point in time we haven’t made that decision ... I don’t know how that plays out, and we’ll have to wait and see,” he said. “We need to do the analysis and ask very tough questions.”

The CFIUS process has been used several times over the years to examine Chinese acquisitions of large American companies, but never a food producer.

In 1990 President George H.W. Bush voided the sale of Seattle-based MAMCO Manufacturing to the China National Aero-Technology Import & Export Corp. In 2005 the Chinese state-owned oil company CNOOC withdrew its bid to buy Unocal in the face of congressional pressure and a pending CFIUS investigation, but in February CFIUS signed off on CNOOC’s $15.1 billion acquisition of Canadian oil giant Nexen Inc.

In 2011 Chinese technology giant Huawei decided to unwind its investment in American software firm 3Leaf Systems after CFIUS threatened to recommend President Obama reverse the deal. In 2012 Obama ordered the Chinese Sany Group to divest itself of four small wind-farm projects that were near a Navy training facility in Oregon.

For Forbes, the issue is one not only of national security but also of the health of Americans who might purchase the pork.

Get The Beast In Your Inbox!

Daily Digest

Start and finish your day with the top stories from The Daily Beast.

Cheat Sheet

A speedy, smart summary of all the news you need to know (and nothing you don't).

By clicking “Subscribe,” you agree to have read the Terms of Use and Privacy Policy
Thank You!
You are now subscribed to the Daily Digest and Cheat Sheet. We will not share your email with anyone for any reason.

“I know the strength of Smithfield foods in terms of the food supplies and what it does, and I’ve never been overly confident in the Chinese capability of monitoring their food supplies and quality that they have, and that’s a very big concern to me,” he said.

He also sees China as an economic competitor with the U.S. and sees the Smithfield acquisition as another data point in a troubling trend.

“I still remember the world where we were buying companies all over the world, and now they are coming to buy ours, and from an economic point of view that concerns me,” he said.