Shanghai regulators fine OSI and unit more than $3.6 million for meat scandal

Posted on October 4, 2016 by Douglas Powell

Regulators in Shanghai slapped U.S. meat supplier OSI Group LLC and a local subsidiary with more than 24 million yuan ($3.6 million) in fines on Sunday, after a bid by the company to fight back against allegations of selling expired meat to fast-food chains ended in failure.

The fines were announced in a statement posted on Monday to the website of the Shanghai Municipal Food and Drug Administration, which said that both OSI and its subsidiary, Shanghai Husi Food Co., would be put on a “black list” of food-safety violators.

Blacklisted firms face being banned from the food industry for between two and five years, according to local regulations.

The fines extend from a 2014 scandal in which Chinese units of OSI were accused by a local television station of selling out-of-date meat to a number of fast-food outlets, including McDonald’s Corp. and KFC parent Yum Brands Inc. A Shanghai court ruled the company guilty, fined its subsidiaries 2.4 million yuan and sentenced 10 people to prison.

In an unusual move for a foreign company in China, closely held OSI challenged the decision, but lost the appeal in July.

McDonald’s meat supplier OSI might quit China after scandal

Posted on September 5, 2014 by Douglas Powell

US-based food supplier OSI may withdraw from the market in China after its Shanghai arm Husi Food supplied expired meat to fast food chains, including McDonald’s and KFC.

McDonald’s China has officially terminated its partnership with Husi and has teamed up with new suppliers.

McDonald’s China confirmed its new list of five meat suppliers, consisting of McKey, Cargill, Hormel, Trident and Sunner, reports Shanghai’s China Business News.

Even though executives at OSI tried to save the company’s business in China, OSI’s partners have refused to take a risk by continuing the partnership.

Burger King, KFC and 7-Eleven have also terminated their business with OSI.

OSI, which was founded in 1909, is the designated global supplier for top fast-food chain restaurants, including McDonald’s, KFC and Pizza Hut.

It spent over two decades and US$750 million to build its business in China, which has collapsed after the expired meat scandal.

Always after an outbreak instead of before: McDonald’s to increase oversight of Chinese suppliers

Posted on September 3, 2014 by Douglas Powell

McDonald’s said it would monitor its suppliers in China more closely after a food safety scandal in the country hurt the chain’s sales and reputation.

The company plans to increase audits and video monitoring at its suppliers and send more employees to meat production facilities to ensure its food is prepared safely. It also named a new food safety officer and created a hotline where employees can report poor food safety practices, McDonald’s said in a statement on Tuesday.

The changes come after a TV report in July showed workers at the McDonald’s supplier Shanghai Husi Food Company repacking meat past its expiration date. McDonald’s stopped using the Shanghai plant and many restaurants were unable to provide some products, including Big Macs and Chicken McNuggets.

McDonald’s, based in Oak Brook, Ill., reported a 7.3 percent drop in July sales at its restaurants in Asia, the Middle East and Africa. Other fast-food companies have been hurt by food safety concerns in China. Husi, owned by OSI Group, based in Aurora, Ill., was also accused of selling old meat to KFC. KFC also stopped using meat from the plant.

China arrests six from OSI unit in food scandal

Posted on August 31, 2014 by Douglas Powell

Chinese authorities have formally arrested six employees from a unit of US food supplier OSI Group, the parent company over a scandal involving expired meat sold to fast food giants.

Authorities have previously announced the detention by police of six officials of Shanghai Husi Food Co, a subsidiary of OSI which operated a factory shut down by the city in July for mixing out-of-date meat with fresh products. OSI’s clients in China previously included McDonald’s and KFC.

“OSI Group confirms that 6 employees of Shanghai Husi have now been arrested following detention by authorities,” the company said in a statement provided to media. “OSI Group will continue to cooperate fully and in good faith with the authorities,” it said, but did not identify the six.

Someone has to fall on their sword: six arrested over food safety scandal in Shanghai

Posted on August 5, 2014 by Douglas Powell

Six senior executives of scandal-saddled Shanghai Husi Food have been arrested, Shanghai’s police chief said Sunday, while vowing zero tolerance to food safety crimes.

Speaking on a radio program, Bai Shaokang, vice mayor and head of the public security bureau of Shanghai, pledged harsh punishment for food and drug safety crimes.

“Food safety has a direct bearing on the interests and safety of every household,” Bai said. “We should have zero tolerance toward food and drug safety scandals,” the official said. “They should be dealt in accordance with the law and severe punishment is needed to prevent such crimes from becoming rampant,”he said.

Police authorities should join in the investigations into food scandals from the very beginning, like the case in Shanghai Husi, so as to boost the effects of harsh crackdown, he said.

On July 20, a local TV station reported that Shanghai Husi had supplied products tainted with reprocessed expired meat to a string of fast food chains and restaurants across China. The food safety scandal has spread to Hong Kong and Japan.

KFC-parent Yum Brands has already announced a halt on purchases from OSI China, the parent company of Shanghai Husi.

OSI Group said on July 28 that it would investigate all of its units in China, and build an Asian quality control center in Shanghai.

Food safety inspections and audits are never enough, in China and elsewhere

Posted on August 1, 2014 by Douglas Powell

When inspectors visited Shanghai Husi Food Co Ltd earlier this summer, the production line at the plant now at the centre of an international food scandal appeared in good order, with fresh meat being handled by properly-attired workers and supervisors keeping a watchful eye over the process.

However, if they had arrived unannounced a day before, they would have found piles of blue plastic bags filled with out-of-date meat stacked around the factory floor, a worker at the facility told Reuters, adding the old meat was often added back into the mix to boost production and cut costs.

“The next day, that meat just disappeared – someone must have disposed of it. The manager said it was an inspection,” said the worker, who wasn’t authorised to talk to the media and so didn’t want to be named.

On July 20, following an undercover local TV report that alleged workers used expired meat and doctored food production dates, regulators closed the factory, which is part of OSI Group LLC, a U.S. food supplier. Police have detained five people including Shanghai Husi’s head and quality manager.

The scandal – which has hit mainly big foreign fast-food brands including McDonald’s Corp and Yum Brands Inc, which owns the KFC and Pizza Hut chains – underlines the challenges facing inspectors in China’s fast-growing and sprawling food industry. China is Yum’s biggest market and McDonald’s third largest by outlets.

Behind the thousands of brightly-lit restaurants offering what Chinese consumers see as better quality food lie supply chains that rely on an army of poorly regulated and inadequately audited processing plants. Yum has around 650 suppliers in China alone.

China’s government has struggled to restore confidence in its $1 trillion food processing industry since six infants died in 2008 after drinking adulterated milk. The head of China’s Food and Drug Administration told the China Daily this week that the food safety situation “remains severe” and the existing oversight system “is not effective.”

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