Wal-Mart Stores, Inc. (NYSE:WMT), the world’s largest retailer recalled its “Five Spice” donkey meat in China after tests conducted by the Shandong Food and Drug Administration revealed that the product is contaminated or mixed with fox meat.

Wal-Mart

The retail giant indicated in its statement posted on Weibo, the popular micro blogging site in China that it has “zero tolerance” for contamination problem. Wal-Mart Stores, Inc. (NYSE:WMT) is increasing its efforts to ensure food safety by implementing routine DNA testing of easily contaminated meat products such as beef, donkey, mutton, and venison. The company also said that its suppliers would be subject to third party inspections, and companies suspected of fraud will be reported to authorities.

Wal-Mart to reimburse customers

Wal-Mart Stores, Inc. (NYSE:WMT) said it would reimburse consumers who purchased  the contaminated Five Spice donkey meat. The retail giant is working with authorities  regarding the investigation against its Chinese supplier.

The retail giant said it would take legal action against the supplier of Five Spice donkey meat, and the person in charge at the supplier’s factory has been arrested. The company also formed its own team to investigate the issue.

Greg Foran’s apology

Greg Foran, president and CEO of Wal-Mart Stores, Inc. (NYSE:WMT) in China said, “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.”

Observers in the retail industry opined that the company’s reputation for quality in China will be affected by the issue. They noted that Wal-Mart Stores, Inc. (NYSE:WMT) was penalized for selling expired duck meat in the country in 2011.

Commenting on the donkey meat contamination, Shaun Rein, managing director at China Market Research Group said, “This is another hit on Wal-Mart’s brand, meaning wealthy shoppers will start to lose the trust they had before.” Rein noted that the market share of the retail giant in China declined from 7.5% to 5.2% over the past three years—that was since that duck meat scandal.

Donkey meat a favorite snack

According to the China’s livestock industry yearbook, 2.4 million donkeys were slaughtered in 2011. Donkey meat is a favorite snack for people in certain areas in the country, but it only represents a small potion of the overall meat consumption in China.

Wal-Mart Stores, Inc. (NYSE:WMT) is not the only foreign company that suffered a setback over food safety in China. McDonald’s Corporation (NYSE:MCD), Yum! Brands Inc (NYSE:YUM), and Carrefour SA (EPA:CA) also suffered food safety problems.