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

Two days into the new year, China has already had its first food scandal of 2014. Wal-Mart Stores Inc. (NYSE:WMT) outlets in China are recalling a popular donkey-meat snack after tests showed DNA from other animals, including fox.

Representatives for the U.S. company, the world's biggest retailer by sales, in China took to their verified Chinese microblog accounts on Weibo and confirmed the recall, announcing that the company will reimburse customers who have purchased the fox-tainted “Five Spice” donkey meat and is cooperating with investigations of its meat suppliers in the eastern Chinese province of Shandong.

The Shanghai Daily reported that a man identified only as Wang said that he had bought the snack but thought it tasted strange. He then asked an unidentified independent institution to test the meat and learned that it was fox meat. Wang reportedly asked for compensation from the supermarket but was initially refused. The supermarket was suspicious of Wang because he had reportedly bought 1,600 packages of the product and suspected he was trying to extort the company. The donkey-meat supplier also denied any problems with its product.

Later, Reuters reported that tests also done by the Shandong Food and Drug Administration concluded that the product contained fox meat.

“We are deeply sorry for this whole affair,” Wal-Mart’s China president and CEO, Greg Foran, said. “It is a deep lesson [for us] that we need to continue to increase investment in supplier management.”

Wal-Mart has been extremely successful in China, and is known for tailoring its bargain shopping experience to the Chinese consumer while being a trustworthy Western brand. This food scandal threatens its reputation for quality and service in the nation’s extremely profitable food and grocery market. “This is another hit on Wal-Mart’s brand, meaning wealthy shoppers will start to lose the trust they had before,” Shaun Rein, a Shanghai-based marketing director at China Market Research Group, said in the report.

Reactions online have already reflected a diminishing sense of loyalty to the supermarket giant. “Yes, Wal-Mart has been known for the quality of its service,” one blogger said. “[Now] regardless of service, quality is gone.”

Questions floated around the Web as to why fox meat was used as a donkey-meat filler. “Isn’t fox meat more expensive than donkey meat anyway?” one user asked. Because fox is usually sold for fur, the byproduct of fox meat is very cheap, going for less than a dollar per pound. Fox meat is reportedly known for its rancid smell and is dangerous for humans to consume because of parasites.