Bucking a trend of hostility to Chinese takeovers of US assets, Shuanghui International Holdings Ltd has completed the acquisition of Smithfield Foods Inc, mostly known for its pork products, making the 7.1-billion-dollar deal the largest takeover of a US company by a Chinese firm.

The deal signifies an increasing overseas push by China to ensure food security amid rising consumption, especially that of meat, and enhance the supply of high quality food to meet the demand of the middle class and affluent consumers.

Feeding China in the context of its rapid economic growth and resource constraints is a daunting task, as consumption growth is likely to slightly outpace its production growth, according to predictions by the Food and Agriculture Organization and the Organisation for Economic Co-operation and Development in their recent annual agricultural outlook. The report forecasts that meat imports are set to soar.

An expanding middle class with rising incomes is leading the change in food consumption habits, in particular a growing appetite for meat, and is demanding better quality products which it is ready to pay a premium.

Food quality has generated much public debate and discontentment in recent years after a series of health and hygiene scandals, including the floating porkers near Shanghai this summer.

The food scandals have gutted Chinese consumers' confidence in the nation's food supply, and demand for imported products has risen substantially. Overall, US meat exports to China, including pork, poultry, and lamb, grew by 27 percent last year. Over the past five years, US pork purchases in China have grown by 155 percent.

Under such conditions, companies are increasingly looking overseas for solutions to persistent domestic problems. They hope to recover their tainted image among local consumers by aligning with foreign brands, and bring technology and production know-how to improve practices at their facilities at home. 

What is remarkable about the Shuanghui deal is the relative ease with which it won approval. Securing assets in the US has not been easy for Chinese companies given the persisting distrust and hostility, often expressed in the guise of national security.

Does the deal signify a change in the US attitude?

It's partially true that the deal passed because the US realizes it needs an open investment environment for investment reciprocity and the overall health of the US economy.

The securitization of FDI in the US has a long history, with FDI transactions sporadically influenced by politicization that emphasizes US national security.

Given that China possesses many of the characteristics that make an emphasis on security issues relatively easy, such as industry specific factors that potentially allow China to gain technological or military advantages, and the relationship between government and business that raises concerns about investment motivation, the extra scrutiny Chinese deals might receive from politicians and interest groups should not be surprising.

Yet the successful closing of the Smithfield deal suggests that, at least on the surface, the merger and acquisition review process as revised under the Foreign Investment and National Security Act of 2007 is able to withstand a certain amount of political pressure.

There is also the realization that the US also stands to benefit from a less hostile, more conciliatory approach toward bilateral trade and investment.

Whether the deal will set the tone for more such mergers remains to be seen.

A bigger question is how Shuanghui uses its access to the US market to establish its reputation and allay some of the concerns raised during the acquisition process in the US, and how effectively it learns, as management has claimed it will, from an industry leader and adopts its best practices to bring a turnaround in Chinese operations.

But for now, China's affluent can enjoy a bit more US bacon.

The authors are PhD students at School of International Studies, Renmin University of China, Beijing. opinion@globaltimes.com.cn