Wal-Mart China to Step Up Vendor Checks After Donkey-Meat Recall

Photographer: Brent Lewin/Bloomberg

A Wal-Mart Stores Inc. outlet logo is reflected on a mirror in Jinan, China. Wal-Mart will invest 100 million yuan ($16 million) over three years to improve food safety in China, including the addition of a mobile food-inspection program and increasing supplier training, it said May 9. Close

A Wal-Mart Stores Inc. outlet logo is reflected on a mirror in Jinan, China. Wal-Mart... Read More

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Photographer: Brent Lewin/Bloomberg

A Wal-Mart Stores Inc. outlet logo is reflected on a mirror in Jinan, China. Wal-Mart will invest 100 million yuan ($16 million) over three years to improve food safety in China, including the addition of a mobile food-inspection program and increasing supplier training, it said May 9.

Wal-Mart Stores Inc. (WMT) said it will step up inspections on suppliers in China after state-owned broadcaster CCTV said the retailer uses unlicensed suppliers and fox DNA was found in meat it sold as donkey.

The company will increase checks to ensure vendors have all necessary permits including government inspection reports and business licenses before a product goes on sale, it said in a Chinese statement on PR Newswire today. The Bentonville, Arkansas-based retailer also said it will examine labels to ensure product claims such as “organic” are accurate.

The inspections expand on Wal-Mart’s pledge to improve food safety after incidents including the sale of sesame oil and squid with hazardous levels of chemicals found in 2012 and the mislabeling of regular pork as organic a year earlier. The world’s largest retailer said Jan. 3 that it will conduct DNA tests of meat sold in China after recalling donkey products from a local supplier that authorities said contained fox DNA.

Wal-Mart uses “special approvals” in China with suppliers it already does business with, it said Jan. 24 in response to the CCTV report. Such approvals are only used in exceptional cases and require three levels of management approval on an item-by-item, supplier-by-supplier basis, the company said.

The company had non-stringent approvals for suppliers, and some didn’t have to go through checks, according to CCTV.

Wal-Mart will invest 100 million yuan ($16 million) over three years to improve food safety in China, including the addition of a mobile food-inspection program and increasing supplier training, it said May 9.

In 2011, police arrested Wal-Mart workers in the southwestern city of Chongqing amid allegations that the retailer mislabeled ordinary pork as organic. The employees were later released. The incident forced the company to close its stores in the city for about two weeks and pay fines.

Wal-Mart is working to maintain a reputation for higher food safety as a company based outside China. The retailer has said it plans to add as many as 110 stores from 2014 to 2016 in the world’s most populous nation.

To contact the reporter on this story: Natasha Khan in Hong Kong at nkhan51@bloomberg.net

To contact the editor responsible for this story: Frank Longid at flongid@bloomberg.net

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