McDonald's tackles China supply issues

4 September 2014

BEIJING: McDonald's, the quick service restaurant chain, has announced a series of measures to improve its food supply operations in China after it was hit by a food scandal at its main supplier in July that damaged its image and dented sales.

The fast food restaurant chain said it will increase the number of audits it conducts into suppliers. Half of them would be unannounced and carried out by third party and internal McDonald's management teams, the Wall Street Journal reported.

There will be more video surveillance at its Chinese suppliers, more quality control experts will be sent to all meat production facilities, and an anonymous hotline will be set up for suppliers and their staff to report unethical practices.

Furthermore, Cindy Jiang, currently senior director of McDonald's global food safety, quality and nutrition, will take over as acting head of the company's national food safety unit in China.

McDonald's was rocked in July when an undercover television documentary alleged it had uncovered unhygienic practices at the Shanghai Husi Food Co., including the use of meat beyond its expiry date.

With more than 2,000 outlets in China, McDonald's third largest market in terms of the number of restaurants, the scandal hit the company hard as Chinese consumers have frequently expressed sensitivity about overall food standards in the country.

Chinese police last week arrested six members of staff at Husi, which is owned by US-based OSI Group, and an investigation into the company is still ongoing.

McDonald's has already announced that it is reconsidering its relationship with OSI, its largest supplier, and said it is evaluating California-based Golden State Foods Corp. as a potential new supplier in China, starting with the city of Guangzhou.

Ben Cavender, a senior analyst at China Market Research Group, said the key lesson for all foreign companies seeking to set up operations in China is to ensure they maintain close management of their partners and operations.

Data sourced from Wall Street Journal; additional content by Warc staff