What Does the Donkey Say? Wal-Mart Fields Contamination Blame
It’s been one week since Wal-Mart (NYSE:WMT) announced that it found fox DNA in its meat sold as donkey in China, and now the world’s largest retailer is fielding criticism from the country’s food administration officials. Upon first announcing the recall of its donkey meat in China, Wal-Mart said in a statement on January 2 that it was withdrawing all products from by Dezhou Fujude Food Co., the supplier of the donkey meat, but it appears as though China is now putting more of the blame of the Bentonville, Arkansas-based company, rather than its vendor.
According to Bloomberg, China says that Wal-Mart hasn’t been properly inspecting the products it purchases in the country, and that’s why it was handed the case of fox DNA being identified in its popular donkey meat in the first place. The Shandong Food and Drug Administration now demands that the retailer compensate those consumers affected by the tainted meat, and also establish a better DNA testing system for its food as quickly as possible. Wal-Mart already made promises last week to reimburse those customers who bought its affected meat, but it deflected at least some blame as Wal-Mart China President and CEO Greg Foran said in a statement, “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.”
Thus, Wal-Mart agreed to stop selling its affected donkey meat product made by Fujude on December 29, but it’s not clear whether it has come around to accepting any sort of criticism for the reported contamination. This may come as a surprise to many, considering Wal-Mart has already faced significant charges in the past such as selling items past their expiration dates and violating food safety precautions, but the retailer has stood by its commitment to safety, even as Chinese officials have been starting to call BS.
Nonetheless, the retailer will now need to move past its donkey meat infraction and continue to work to lure Chinese customers into its stores, especially considering Wal-Mart plans to open as many as 110 stores over three years in the world’s most populous nation. Now that China’s middle class is growing and there is a rising demand for middle-of-the-road retail in the country, Wal-Mart identifies China as its most lucrative market, second only to the U.S., and it recognizes that it needs to maintain its reputation in the country.
To do so, Bloomberg reports that Wal-Mart said last year it would invest 100 million yuan over three years to upgrade food safety in China by adding a mobile food-inspection program and improving supplier training. Now that the retailer faces intense competition from regional rivals like Sun Art Retail Group and China Resources Enterprise Ltd., it has little to no room to make any mistakes, and this latest donkey meat fiasco is definitely not helping its cause.