Walmart to Tighten Controls on Vendors, Donkey Meat

Retail

Published: January 29, 2014 7:10 am

Last Updated: April 28, 2020 9:30 am

Source: courtesy of Wal-Mart Stores Inc.

A donkey meat recall earlier in January at some Wal-Mart Stores Inc. (NYSE: WMT) Chinese stores has resulted in the company’s adoption of tighter controls on its Chinese suppliers. China’s state-controlled television, CCTV, had charged that Walmart used unlicensed vendors at its stores after the company was forced to recall donkey meat that had been tainted with fox meat.

Walmart said that it will scrutinize vendor documents and licenses more thoroughly and that it would collect other documents that will verify product labeling, including claims that certain products are organic. The company experienced a problem in 2011 when some pork products were mistakenly labeled “organic.”

The world’s largest retailer also pulled all donkey meat from its stores following the discovery that it was tainted with DNA from other animals, including fox. Walmart says now that it will begin DNA testing of the meat products it sells.

CCTV, which has also charged Walmart with a history of selling faulty or poor quality products, has been a thorn in the side of other product makers, including Apple Inc. (NASDAQ: AAPL). In March of 2013, the TV station charged Apple with providing lousy after-sales service to Chinese customers.

China is Walmart’s new frontier, and Chinese consumers do not react well to being sold mislabeled or tainted products. Remember the sales dip at the Chinese operations of Yum! Brands Inc. (NYSE: YUM), owners of the KFC fried chicken restaurants, following revelations of excessive levels of antibiotics in some of its chicken?

Walmart’s market share in China has been falling, according to a report at MarketWatch, and the company plans to open more than 100 new stores in the country over the next three years to bring its total locations up over 500. China accounts for about 30% of Walmart’s total sales.

Walmart shares closed at $74.67 on Tuesday night, in a 52-week range of $68.13 to $81.37. Shares were up 0.9% in premarket trading on Wednesday at $75.35.

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