Wal-Mart Stores, Inc. (NYSE:WMT), the largest retailer worldwide. announced its plan to increase its investment for food safety in China by the end of 2015. The firm had been receiving criticism regarding its operating procedures and the reported mislabeling of donkey meat in the country.
Earlier this year, the retail giant recalled its donkey meat products in China after DNA testing found traces of fox meat in some ‘Five Spice’ donkey meat products. The Chinese government also penalized Wal-Mart Stores, Inc (NYSE:WMT) for selling expired duck meat in 2011.
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Over the past three years, the retail giant paid total penalties of around $9.8 million on allegations that it was selling poor quality products and posting misleading prices.
Wal-Mart, Stores, Inc. (NYSE:WMT) compensated affected consumers and significantly increased the DNA testing of its meat products beyond what is legally required. Prior to that, the company had already decided to invest $16.5 million to improve its food safety measures in China over the next three years.
Wal-Mart tripled food safety investment to $48.2 million
Today, Wal-Mart Stores, Inc. (NYSE:WMT) said it decided to triple is previously announced investment for food safety measures in China to $48.2 million between 2013 and 2015.
Paul Gallemore, the retailer’s chief compliance officer in China, said the additional budget will be used for food testing, permits and DNA testing of meat products sold in the country and supplier audits. The retail giant has approximately 7,000 food suppliers in the country, but the number was recently reduced by 4% because some suppliers failed to pass food safety tests and audits.
Food safety in China is a difficult task
AsianInspection.com, a leading quality control service provider partnering with brands, retailers and importers to secure and manage their supply chain, emphasized in its report that food safety is a difficult task in China given that more than 50% of Chinese food processing and packaging firms failed a safety inspection in 2011.
The firm also noted that China exported 4.5 billion tons of food in 2011 alone, and significant amount of that volume goes to the United States. According to the U.S. Department of Agriculture, the U.S. imported 4.1 billion pounds of food products from China last year.
Wal-Mart to expand stores in China
Wal-Mart Stores, Inc. (NYSE:WMT) is also planning to open an additional 110 stores in China by 2016. The retail giant currently has around 400 stores in the country. It will also add mobile testing labs to more frequently check its products, and it will invest in iPads and other technology to improve the training of its employees on food safety.