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Tuesday, December 22, 2015

American bacon will save China



Last year, a Chinese company bought America's largest producer of pork for $4.7 billion. Democratic Senator Debbie Stabenow -- who in her 65 years has never held a job in private enterprise -- was alarmed:
The Chinese paid a 30 percent premium. Very interesting. Not exactly the best business deal, so what’s really going on here? What really is it that this merger, this purchase, was all about?
And she said:
This isn’t just an acquisition of a company. It’s 25 percent of the pork industry in the United States.
Leave it to a liberal Democrat to revive the Yellow Peril of the 19th century in the 21st century.

This woman who has never held a non-government job in her life -- this clueless anti-capitalist -- could not in her life figure out what the Chinese company was buying.

Technology.

The American corporation figured out a way to raise, slaughter, and process 10,000 pigs a day in a way that is safe to the environment and to workers, as well as safe to the customers.

From the Wall Street Journal on Monday:
The world’s largest pork producer, WH Group, is now opening the doors of new factories that will produce American-style sausage, ham and, yes, bacon in China, the company said in a recent statement. WH, which runs Shuanghui International Holdings and the U.S. pork producer Smithfield Foods, has been hustling over the last few months to import raw materials from Smithfield back in the U.S. to feed demand in China.
The bet is that China, like many other places, will go hog wild, buying up packages of bacon, sausage and cold cuts the way that American shoppers do. China, home to 20% of the world’s people, is already the largest pork consumer on the planet, according to the U.S. National Pork Board.
So the nation's largest pork producer just quintupled its market, going from 300 million Americans to 1.5 billion Americans and Chinese. This will also create a few jobs and some taxes in the United States. But wait, there's more:
Bringing the bacon back to China was part of Shuanghui’s push to acquire Smithfield back in 2013. Shuanghui wanted to snap up slaughtering and packaging technology. It also wanted safe sources of meat to bring back home.
China’s food and agriculture industry has been racked by health and hygiene scandals in recent years. Thousands of dead pigs were found in rivers around Shanghai in 2013.
(The deal was announced in 2013 and consummated last year, where after the fact Stabenow went hog wild.)

So this is a very, very, very good deal. Maybe if Senator Stabenow understood the basics of business she would have guessed this.

Instead, she is off to the next phony crisis. No one will hold her accountable for her hysteria last year. The government is run by people ignorant of the very capitalism that made this country great.

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