A Sioux Falls meatpacking plant was forced to close when it became the epicenter of COVID-19 in South Dakota. Three weeks after executives from its Chinese owner, WH Group, visited the plant, a month after President Trump's ban on travel from China, nearly 600 of Smithfield Foods' 3,700 employees tested positive for the virus, as have 135 additional people in close contact with employees.
Smithfield Foods was started in 1936 by a family in Virginia. Today, the Chinese own Armour and the famous Smithfield hams, together with the most quintessential American brand of all: Nathan's Famous hot dogs, with its iconic annual eating contest.
In 2013, Smithfield Foods was bought by the Shanghui Group, later rebranded as the WH Group, for $4.7 billion. It remains the largest total acquisition of a U.S. company by the Chinese. With that purchase, the Chinese owned one in four pigs raised in the U.S. and, by adding 146,000 acres, continued to be the world's largest buyer of American farmland.
The purchase was underwritten with a $4-billion Bank of China loan facilitated by the Chinese Communist Party. The deal was an integral part of the CCP's 2011 five-year plan to improve the Chinese economy with purchases of overseas farmland and food processing companies. Food is poised to become the oil of the 21st century, with demand increasing for a scarce resource. The CCP identified meat processing as a strategically important industry, and, with the Smithfield acquisition, China gained access to the world's most advanced animal processing technology. Former Smithfield CEO Larry Pope said, "In many respects, this is carrying out the (Chinese) government's five-year plan, which is to improve the quality and the security of their food supply."
The Chinese consume half of the world's pork production. Pork supply is so important to them that, just as the U.S. government maintains a strategic oil reserve, China stashes away vast amounts of frozen pork in case of shortages, outbreaks of swine disease, or war. Smithfield has retooled to give greater focus to the China market. "Down the road, if this continues and we ship a lot of product to China, certainly I think we (in America) could see shortages, particularly on hams and bellies," admitted Smithfield's director of procurement.
Smithfield is run by Wan Long, a former foot soldier in Mao Zedong's army. WH Group is the world's largest producer of packaged meats. Wan's path to dominance was cleared by Li Keqiang, now a member of the CCP's Politburo Standing Committee, the party's supreme leadership circle.
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