Last updated: August 22. 2013 7:46PM - 114 Views

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Seven years after Goldman Sachs bought a hunk of China’s Shuanghui International Holdings, the meat-processing giant has returned the favor by offering to acquire America’s largest pork producer, Smithfield Foods. If the deal survives the scrutiny of Smithfield’s shareholders and the U.S. Treasury Department, the $4.72 billion deal would be the largest takeover of a U.S. company by a Chinese firm.



In today’s globalized economy, capital knows no borders. Here in capitalism central, however, this mutually agreed-upon merger is raising hackles. Politicians have fretted about fading American power, consumers harbor fears about food safety, and Virginians worry that a historic and scenic seaport will be altered by a flood of Chinese workers. “I’m not very happy about it,” Smithfield resident Michele Vandeveer told the Washington Post. “Nothing’s more American than ham.”



Despite such meaty concerns, the benefits of this union outweigh the costs. Smithfield shareholders would get $4.7 billion, a 31 percent premium on the stock price. Smithfield CEO Larry Pope has said Chinese pork would not be imported, and Shuanghui has agreed to retain the American management team and to honor the bargaining rights of Smithfield employees. With a variety of global ventures in food, logistics, and flavoring, Shuanghui provides Smithfield with many opportunities for synergy and international expansion.



While the American meat market is mature and stagnant, its Chinese counterpart is fattening rapidly as the ranks of the country’s nouveaux riches expand. The recent spate of food scandals in China have made the appetite for foreign meat that much more voracious.



In addition to the economic gains, such transpacific mergers contribute to geopolitical stability. Amid military and cybersecurity tensions between the incumbent and emergent superpowers, multinationals with dual citizenship help avert conflict by raising the stakes of hostilities for both sides.



The marriage of these two big pigs can serve as another piece of the “Pacific Bridge,” which is projected to become the largest trade relationship in history. An alliance between the Chinese technology firm Lenovo and IBM’s personal-computers division has turned out to be a boon for both companies, and both nations. Much as the Silk Road hastened cultural exchange, trade across the volcanic Pacific Rim can help promote peace.


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