Wal-Mart Upgrades its Online Retail Investment in China
U.S. retail giant Wal-Mart has ramped up its presence in the rising supermarket competition in China, adding to its portfolio local online seller Yihaodian. REUTERS

Wal-Mart was accused Thursday of breaching food safety standards in China by selling sesame oil containing excessive amounts of benzopyrene and squid containing hazardous levels of cadmium, both chemicals classified as carcinogenic.

Chinese Food Safety Administration's accusation that the U.S. retailer sold products hazardous to human consumption in March coincided with Beijing's food safety week, an annual national campaign, during which the government announces a series of enforcement actions to reassure the public. The government agency said the tainted sesame oil and squid were domestically produced.

Industry analysts said the crackdown on foreign retailers during such campaigns was typical and that foreign companies were more closely monitored in China than their domestic counterparts, the Wall Street Journal reported.

The new accusation came even as Wal-Mart was just recovering from a claim by the animal-husbandry department of the southwestern Chinese city of Dazhou earlier this week that the retailer sold pork sourced from diseased pigs in January. The department said that food safety regulators had found evidence that Wal-Mart violated food safety standards.

A Wal-Mart spokesperson responded to the substandard pork controversy, saying that the product had been immediately removed from shelves in the store and the supply had been discontinued. However, the retailer is yet to respond to the latest claims.

Food safety has been a growing concern in China and the government attempted to consolidate food safety regulation with the restructuring of the State Drug Administration to become the State Food and Drug Administration in 2003.

The State Council, China's Cabinet, Wednesday announced measures to improve food safety, tightening supervision and harsh punishments for violators, Xinhua news agency reported.

It is an onerous task for the government to ensure food safety, said a statement released Wednesday after a State Council executive meeting presided over by Premier Wen Jiabao. The council warned of harsh crackdown on violators of food safety standards.

The council's statement urged Chinese traders to accept the responsibility for ensuring food safety, adding that policy regulations would be revised to increase penalties to the violators.

In April, Wal-Mart was hit by allegations that it sought to cover up a bribery campaign orchestrated by its top executives in Mexico to facilitate rapid penetration into the region. It was reported that executives paid bribes to Mexican officials to acquire licenses for new stores and that even after obtaining evidence, the internal investigation was closed without informing law enforcement officials.

Citing a letter from two congressmen investigating the bribery charges leveled against the company, recent reports said that Wal-Mart lawyers identified China as one of the most corrupt countries in the world along with India, South Africa, Brazil and Mexico.