Wal-Mart Stores (NYSE:WMT) is cracking down on its supply chain management after an embarrassing recall in China forced the retailer to pull its donkey meat from the shelves on account of tests confirming the product contained the DNA of other animals. It was a rough start to the new year for the world’s largest retailer, but Bloomberg reports that the company said in a statement Thursday that it is now adding DNA tests of meat it sells in China, and it has withdrawn all products it secured from local supplier Dezhou Fujude Food Company Ltd., the vendor that sold it the tainted donkey meat. Dezhou Fujude officials are now being held in “criminal detention” and Wal-Mart may decide to take legal action.
Wal-Mart’s donkey meat recall is especially damaging to the retailer’s image in China not only because the country is the world’s largest retail market, but also because the Bentonville, Arkansas-based company has already suffered several contamination and mislabeling incidents that have made Chinese consumers question their trust in the retailer. Wal-Mart has plans to open as many as 110 stores over three years in the world’s most populous nation, but now that consumers recognize its faux pas with the tainted donkey meat and remember its 2012 citation involving the sale of sesame oil and squid with hazard levels of chemicals, it is possible that the retailer could experience more flattened demand in the future.
Nonetheless, according to Bloomberg, Wal-Mart says it has done everything it can this week to ensure consumers that its contamination issues are behind it, and the company is taking the necessary measures to make sure that problems don’t continue. Greg Forgan, the company’s China president, said in a statement Thursday, “Walmart will spare no effort in fulfilling its obligations as a retailer and in working with government authorities in their investigation. Walmart commits to further enhance sample testing in the future.”
The Chinese market was a big focal point for Wal-Mart in 2013, and will continue to be in 2014, as the country hosts a population with a growing middle class that has the potential to significantly bolster the retailer’s international business. The company already said back in October that it plans to open more stores in the area and increase its presence on the Web in China on account of studies showing that more and more Chinese consumers are into online shopping, but Wal-Mart’s market share in the region is still dropping, and that’s a trend it would like to stop.
In order to ensure that consumers are still visiting Wal-Mart’s stores in the future, spokespeople for the retailer have been quick to point out its increased security measures, and Bloomberg reports that last month, Foran said that the company is planning to boost the number of imported items fivefold in 2014 in order to combat food-safety concerns. Wal-Mart isn’t the only retailer that has come under the spotlight for food contamination, as many other companies have also been cited for food safety violations and contamination in the country, but China’s government has recently vowed to become stricter about how foreign companies run their business in the country.