Bringing home the bacon

Wan Long, who helped turn a single pig processing plant into China's largest producer, explains the reasons for his US$4.7 billion swoop on the American company Smithfield Food as he adjusts six miniature porcelain pigs on his desk.

Wan, 72, the chairman of Shuanghui International Holdings, who won Smithfield's acceptance last week for what would be the largest Chinese acquisition of a US company, is not just reordering the pink and blue piggies in front of him. He is seeking to tap foreign expertise and technology to help reshape food safety and production in China's pork industry.

"The question of food safety, whether it's to American consumers or Chinese consumers, is a big deal," Wan said in his office in Luohe city, Henan, about 800 kilometres south of Beijing, sitting in front of a world map. "Our nation has a tighter and tighter grip over food safety."

Mainland consumers spend about US$183 billion on pork a year, favouring parts - pig heads, feet and offal - that are not popular on American menus. The farms are mostly small, though combined they produce about five times more pig meat than the United States. But the mainland food industry had been wracked by scandals ranging from tainted milk to the illegal dumping of pigs in rivers.

Smithfield accepted Hong Kong-based Shuanghui's offer of US$34 a share on May 29, a price that was a 31 per cent premium to the company's closing price the day before.

Smithfield now has 30 days to continue talks with two other possible buyers, Charoen Pokphand Foods of Thailand and JBS of Brazil, according to a source.