A Case Study of Shuanghui International's Strategic Acquisition of Smithfield Foods

Abstract

Pork consumption accounts for more than 60% of total meat consumption in China. China’s rapid economic growth, expanding middle class and continuous urbanization is increasing the demand for pork and importance in stabilizing China's pork market. This also creates an opportunity for foreign pork producers to export more pork to China. How can this be done? Foreign direct investment is one solution when trade barriers exist. This case study explores the reasons why China's Shuanghui International acquired the U.S. based, Smithfield Foods. Analysis shows that the success of the two companies’ merger depends upon the establishment of an efficient transnational pork supply chain. This case study can be used for Bachelor of Science and Master of Science students in international economics, agribusiness and agricultural marketing courses. It will also be helpful to business managers who want to export more agricultural goods to China.