Wal-Mart China Rides Out Tainted Donkey Meat Recall

Wal-Mart

Wal-Mart (NYSE:WMT) is in the doghouse again in China, and this time, it’s all thanks to donkey meat. According to NBC News, the big-box retailer has been forced to recall donkey meat at some of its outlets in China on account of tests showing that the product contains the DNA of other animals. Wal-Mart confirmed via social media on Wednesday night that the meat is tainted and customers will be reimbursed for the product. The company said it is cooperating with authorities like the Shandong Food and Drug Administration, which are in the process of investigating Wal-Mart’s Chinese supplier.

The product in question is Five Spice donkey meat, which NBC News reports is a popular snack in some areas of China, even though donkey meat doesn’t account for a huge fraction of overall meat consumption in the country. This isn’t the first time Wal-Mart has come under the spotlight for its meat products in China: In 2011 the retailer was fined for selling duck meat past its expiration date. The Shandong Food and Drug Administration said the Five Spice product contains fox meat.

Wal-Mart China President and CEO Greg Foran said in a statement confirming the meat issues: “We are deeply sorry for this whole affair. It is a deep lesson (for us) that we need to continue to increase investment in supplier management.”

China is an important market for Wal-Mart and one the retailer has focused on significantly in the past few years. The country is currently the largest grocery market in the world and is expected to grow to $1.5 trillion by 2016. Wal-Mart has been vocal about its efforts to increase its presence in China, confirming in October that it is planning to expand on the ground and over the web in the country.

Wal-Mart has worked diligently to continue opening new stores and closing ones that are struggling, but analysts still suspect the latest meat faux pas could hurt the retailer’s business in the country. According to NBC News, China Market Research Group estimates that Wal-Mart’s market share has already fallen from 7.5 percent to 5.2 percent over the past three years. Shaun Rein, managing director of the group, said to NBC News, “This is another hit on Wal-Mart’s brand, meaning wealthy shoppers will start to lose the trust they had before.”

Now it is up to Wal-Mart to strengthen its food safety rules and keep a closer eye on its product supplier. The company said it will take legal action against its supplier; the person in charge at the supplier factory has reportedly already been detained. Wal-Mart shares started 2014 rising 0.22 percent, sitting at $78.89 as of 9:40 a.m. Eastern.

More from Wall St. Cheat Sheet

More from The Cheat Sheet