By Peter Galuszka
Free trade capitalists may cheer the proposed $4.7 billion takeover of Virginia icon Smithfield Foods by a Chinese firm, but there is plenty to give pause and the blowback is creating some strange bedfellows.
The major issues are whether one should want Chinese-style management in charge of American corporations given their record on safety and market ethics.
Even arch-conservative Del. Bob Marshall is sounding alarm bells. He wrote in letter to Smithfield’s brass that: “China’s widespread food safety problems are known to American consumers and will engulf Smithfield Foods regardless of the names under which they are sold.”
Among Marshall’s points is that Shuanghui International Holdings Inc., which wants Smithfield, has a record of unsafe practices in its current food operations. He cites press accounts that the firm bought pigs 2011 that contained clenbuterol that was banned in 2002 and that ribs the firm sold last year had maggots and sausage had too much bacteria.
The takeover, which still needs approval from U.S. regulators, took a hit when a few days after its announcement, at least 119 people were killed in a poultry slaughterhouse in Northern China. The Chinese media says that many workers had been locked in the factory, which is a common workplace practice in that country.
In the past two years, some 70,000 Chinese have lost their lives in industrial accidents – a record that make any reasonable person think twice.
To be sure, U.S. firms have had their troubles including some in Virginia. In 2008 and 2009, a salmonella outbreak that killed nine and sickened 666 was traced to filthy operations at a Georgia plant owned by Lynchburg-based Peanut Corporation of America. And, according to the Journal, U.S. firms operating in China may tend to adopt to local practices. In 2011, dust explosions killed four and injured 59 at factories owned by suppliers for Apple Inc.
Shuanhui officials say they want to “learn” about safer practices from Smithfield. And, there could be a case that Western involvement may help the Chinese modernize. Coal mine deaths in 2012 dropped to 1,384, a decrease of nearly 30 percent. Last year, 19 American coal miners died. Of course, China mines nearly three times the amount of coal as China does and a number of U.S. deep mines were slowed or shuttered by market conditions. Not that long ago, however, China was losing up to 5,000 miners every year.
The problem with the Smithfield takeover – if the Chinese executives are to be believed – is that it puts the cart before the horse. If the Chinese own Smithfield their practices and cultural will prevail, no matter how bright a picture they want to paint.
That is something the free traders might want to think about before they follow a Paula Deen recipe calling for Smithfield brand sausage or bacon.
By Peter Galuszka
