Drained 50 billion yuan, 'toxic meat' scandal erupts, profits earned from Chinese consumers are funneled overseas—has the 'ham sausage giant' been blasted onto Weibo’s trending list?

Just three years later, the foreign investor withdrew and transferred its shares to Shing Tai Group—a British Virgin Islands company established abroad by Wan Long and 262 other core managers. Selling cheaply to foreign investors, who then resold to management: once this round was complete, Shuanghui officially transformed from a state-owned enterprise into a private enterprise led by Wan Long. Wan Long’s capital maneuvers were truly masterful—he constructed a seven-tiered corporate structure to control domestic Shuanghui Development, holding absolute control with a 70.33% stake. A full seven layers. Like an exquisitely crafted set of Russian nesting dolls, each layer is domiciled in a different offshore tax haven. Its purpose is chillingly clear: strengthen control, enable cross-border arbitrage, and evade regulation. And all this intricate design ultimately serves one stark, naked action: dividend distribution. 02 Who pocketed the money? Dividends, on the surface, sound positive: when a listed company makes profits, it distributes them to shareholders—that’s only natural. But Shuanghui’s dividends are entirely different. Through a dual-class share structure, Wan Long and his son hold absolute control over Shuanghui Development; the vast majority of the company’s earnings flow straight into their family’s pockets. Over ten years, they extracted 51.7 billion yuan in dividends—more than 99% of A-share listed companies—but what about food safety investment? What about quality inspection systems? What about the ‘head-to-head inspection’ pledge? In capital-market jargon, this is called 'asset-stripping dividends'. The money’s path is crystal clear: Chinese consumers pay for meat → money flows into Shuanghui’s accounts → mandatory high dividends (over 70%) are paid out to Rothkis → further upstream to WH Group → finally into offshore entities controlled by the Wan family. Part goes toward repaying that old U.S. debt; the rest becomes the family’s discretionary income. In 2013, WH Group took on massive debt—$7.442 billion—to acquire Smithfield Foods, America’s largest pork supplier, in its entirety. WH Group thus inherited enormous debt. Although the acquisition consumed huge capital, Smithfield’s operational performance proved underwhelming. Ultimately, WH Group had no choice but to turn to Shuanghui Development—using Shuanghui’s dividends to service its debt. In 2014, WH Group listed on the Hong Kong Stock Exchange, raising HK$15.9 billion—most of which went straight into filling the debt hole left by Smithfield. In effect, global investors footed the bill for this cross-border acquisition. Meanwhile, Smithfield—a U.S.-based company—keeps its operating profits overseas, never repatriating them to China. Domestically, Shuanghui alone shoulders all costs: market expansion, raw material procurement, and quality control investments. Effort is exerted domestically; profits are harvested overseas—the cross-border division of labor is meticulously delineated. 03 'Toxic pork' scandal re-emerges Pork found with antibiotic levels 38 times above the legal limit—a figure that left everyone speechless. On June 2, media reports publicly revealed test results showing pork with antibiotic residues 38 times over the permissible limit—once again thrusting Shuanghui Development into the eye of the storm. Many may not realize this isn’t Shuanghui’s first scandal. Fifteen years ago—in 2011—Shuanghui made national headlines over the 'clenbuterol' (lean meat powder) incident. At the time, founder Wan Long publicly apologized and pledged six corrective measures—the most critical being 'head-to-head inspection': testing every single pig. Fifteen years later, those three words—'head-to-head inspection'—have become empty rhetoric. And during those fifteen years, another set of figures is even more staggering: Wan Long and his son Wan Hongwei have extracted 51.7 billion yuan from the listed company via dividends.

Eleven years after the 'astronomical-price' acquisition deal, does Wan Long regret it?

Now, eleven years later, the same 'astronomical-price' privatization and acquisition deal—once pursued at the cost of massive debt—is once again prompting plans for an independent spin-off and U.S. listing. Why? 'Astronomical-price' acquisition ends in 'crippling debt' If one were to identify pivotal milestones in Wan Long—the 'China’s Butcher King'—entrepreneurial journey, the privatization and acquisition of Smithfield would certainly rank among them. In May 2013, Shuanghui International (the predecessor of WH Group) acquired Smithfield Foods—the world’s largest hog producer and pork processor—for $7.1 billion, marking at the time China’s largest-ever acquisition of a U.S. company. WH Group thereby became a multinational corporation spanning Asia, the Americas, and Europe. Per the acquisition agreement, Smithfield’s shares were delisted from the NYSE and it became a wholly owned subsidiary of Shuanghui, primarily responsible for operations across the U.S. and Mexico, while retaining its brand name. Simultaneously, Smithfield committed to supplying pork raw materials to related company Shuanghui Development—making 'U.S.-imported pork' a distinctive raw-material advantage for Shuanghui. Post-acquisition, Smithfield continued expanding through external acquisitions: in 2016, it acquired Clougherty, LLC, a U.S. pork product producer and processor; in 2017, it acquired meat companies in Poland and Romania; and in 2021, it acquired meat processing firms in Slovakia and Hungary. During this period, WH Group’s goodwill surged dramatically—from $205 million at end-2012 to $2.119 billion as of end-June 2024. At the same time, the 'astronomical-price' acquisition saddled WH Group with massive debt: total liabilities ballooned from $947 million in 2012 to $11.018 billion in 2013. Long-term borrowings jumped from $30 million to $6.672 billion; short-term borrowings rose from $164 million to $684 million. By year-end 2013, WH Group’s cash and cash equivalents stood at just $770 million—insufficient to cover mounting debt pressure. Overburdened, WH Group listed on the Hong Kong Stock Exchange in August 2014—the year after the Smithfield acquisition—and raised HK$15.2 billion. In its prospectus, WH Group mentioned 'Smithfield' over 1,600 times, highlighting it as a key growth driver, and planned to use part of the proceeds to repay acquisition-related loans. As of end-June 2024, WH Group still carried $1.225 billion in short-term borrowings and $2.121 billion in long-term borrowings. Meanwhile, its cash and cash equivalents totaled $770 million—clearly insolvent. Spinning off Smithfield as an independent listed entity may well be an effort to secure a new financing channel to inject fresh capital amid mounting group debt pressure. Once a 'cash cow', now a 'firewood stick' Initially, acquiring Smithfield did deliver substantial benefits to WH Group. From 2013 to 2014, WH Group expanded rapidly, achieving a compound annual revenue growth rate of 88.47%. Regarding net profit: although WH Group posted a $263 million net loss in 2013 due to the acquisition, net profit surged to $766 million in 2014—up 135.69% versus 2012.

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Smithfield Foods trims full-year forecasts as consumers rein in spending

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