Walmarts in China recall donkey products after fox meat found

Company vows to improve supplier management

SHANGHAI (Reuters) — Wal-Mart Stores Inc., the world’s largest retailer, has recalled donkey meat sold at some outlets in China after tests showed the product contained the DNA of other animals.


Walmart will reimburse customers who bought the tainted Five Spice donkey meat and is helping local food and industry agencies in eastern Shandong province investigate its Chinese supplier, it said last week in official posts on China’s Twitter-like Weibo. The Shandong Food and Drug Administration earlier said the product contained fox meat.


The scandal could dent Walmart’s reputation for quality in China’s $1 trillion food and grocery market, where it plans to open 110 new stores in the next few years. China is the largest grocery market in the world and is set to grow to $1.5 trillion by 2016, according to the Institute of Grocery Distribution.


“This is another hit on Walmart’s brand, meaning wealthy shoppers will start to lose the trust they had before,” said Shaun Rein, Shanghai-based managing director of China Market Research Group. 


CMR estimates Walmart’s market share fell from 7.5 percent to 5.2 percent over the last three years.


Donkey meat is a popular snack in some areas of China, although it only accounts for a tiny fraction of overall meat consumption. China slaughtered 2.4 million donkeys in 2011, according to the country’s livestock industry yearbook.


Walmart, French grocer Carrefour SA, McDonald’s Corp. and KFC-parent Yum Brands Inc. have previously come under fire in China over food safety issues, a sensitive topic in a country riddled with scares from a fatal tainted milk scandal to recycled “gutter oil” used for cooking.


Walmart said it had set up an investigation team to look into the incident, would strengthen food safety rules and take legal action against the product supplier. The person in charge at the supplier factory had already been detained, it added.


“We are deeply sorry for this whole affair,” said Greg Foran, Walmart’s China president and chief executive officer.


“It is a deep lesson (for us) that we need to continue to increase investment in supplier management.”


Walmart has had a troubled past in China. 


In 2011, China fined the U.S. retailer, along with Carrefour, a combined $1.57 million for manipulating product prices. Walmart was also fined that year in China for selling duck meat past its expiry date.


Food safety scandals can have a significant impact in China. Yum has struggled to recover sales in China more than a year after a chicken supplier to KFC was found to have used excess levels of antibiotics. 


However, analysts said the impact of the current scare would be far more subdued.


Consumers on the popular micro-blogging site Sina Weibo were at a loss whether to criticize Walmart or support it. Online sentiment can spread quickly in China, where there is a high proportion of social media users.


“Isn’t fox meat more expensive than donkey meat anyway?” asked one bemused user.