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Wal Mart issues donkey meat recall in China

Article By: ,  Financial Analyst
January 3, 2014 10:15 AM

A donkey meat product sold in China has been recalled by supermarket chain Wal-Mart after investigations found it contained the DNA of other animals.

Donkey meat is popular in China, but the product was found to contain traces of fox as well.

The Shandong Food and Drug Administration examined the Five Spice donkey meat product before coming to the conclusion that it included DNA from other animals as well.

Wal-Mart announced that it will reimburse all customers who have bought the product and the chief executive of Wal-Mart's Chinese operations Greg Foran stated that the company has a "deep lesson" to learn on the back of the investigation.

He explained that the firm will have to pay closer attention to supplier management, increasing its investment in this part of the business, if it is to be able to avoid these issues occurring again.

Wal-Mart reputation

Shaun Rein, Shanghai-based managing director of China Market Research (CMR) Group, stated that wealthy shoppers may start to lose trust in Wal-Mart as a result of this event.

CMR estimates that Wal-Mart's market share in the Asian nation fell from 7.5 per cent to 5.2 per cent over the last three years, with Mr Rein adding: "This is another hit on Wal-Mart's brand."

The donkey meat story comes only a year after a similar scandal erupted in the UK, when supermarkets such as Tesco were found to be selling products such as ready meal lasagnes that contained DNA from horses. Wal-Mart is the parent company of UK chain Asda.

Despite Wal-Mart having to issue an apology over the presence of fox meat in the Fixe Spice product, the share price of the company rose today (January 3rd).

Stocks in the firm were up by 0.28 per cent to reach 78.91, which is not far away from the firm's 52-week high share price of 81.37. Stocks in Wal-Mart have been steady over the course of the last year, only falling as low as 67.72 in the last 12 months.

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