Carrefour ordered to close China store

Carrefour ordered to close China store

(Reporting by Michael Martina and Sally Huang; Editing by Don Durfee and Matt Driskill) Reuters – Mon, Mar 19, 2012

BEIJING (Reuters) - Authorities in central China have ordered European retail giant Carrefour to temporarily close one of its stores, a local government official said on Monday, days after state media said the chain was passing off regular chicken as free-range meat.

 The closure is the latest case of Chinese officials cracking down on foreign brands and comes after food safety authorities said last week they were investigating a Beijing branch of McDonald's Corp , the world's biggest hamburger chain, after reports of quality problems there.

State media had reported that the Carrefour store in the capital of Henan province, Zhengzhou, had been selling meat with expired freshness dates and mislabeled ordinary chicken as free-range chicken.

 "According to the law on protection of consumer rights and interests, our office on March 18 issued an order for Carrefour's Huayuan branch to cease and reorganize operations," an official at the local industry and commerce department told Reuters by phone, reading a statement.

"After reorganization is completed to meet standards, it can resume operations," she said, without giving further details.

 Repeated calls to Carrefour's China office on Monday went unanswered.

 Carrefour China earlier had posted an apology for the incident on its Chinese-language website (carrefour.com.cn), saying the company was taking immediate measures to resolve the food safety issues.

 "Carrefour China attaches great importance to...reports of fresh food product quality management at the Zhengzhou Huayuan store and sincerely apologizes for any impact or losses suffered by consumers," the statement said.

China has struggled to rein in health violations in the unruly and vast food sector despite harsh punishments and repeated vows to deal with the problem.

The country is notorious for its food safety woes, with tales of fake cooking oil, tainted milk and watermelons that explode from being fed too much fertilizer, regularly appearing in the news.

 Last October, 13 Wal-Mart stores in the city of Chongqing were shut down for two weeks after local authorities discovered branches of the world's largest retailer selling regular pork labeled and priced as organic.

Both the American Chamber of Commerce in China and the European Union Chamber of Commerce in China have published reports saying foreign firms are sometimes unfairly singled out for punishment.

Reflections:

A branch of the European retail giant Carrefour that is located in Zhengzhou, China was ordered to be closed by the local industry and commerce department. This was because of an investigative report that was done by State media which revealed that the store had been selling meat with expired freshness dates and had mislabeled ordinary chicken as free-range chicken which is more expensive. The same investigative report had also identified a Beijing branch of McDonald’s as having quality and food safety problems which is now being investigated by the local food safety authorities.

This situation is definitely a crisis for Carrefour because one of their stores has been shut down until they can reorganize their operations and meet quality and safety standards to the satisfaction of the local industry and commerce department.

The media report is a risk for the McDonald’s branch located in Beijing because they could be ordered to shut down as well if they do not act quickly to ensure that the investigation does not reveal any lapse in food quality and safety.

Carrefour is handling the situation fairly well as they have posted an apology for the incident on their Chinese language website. However, they did not answer any phone calls to address this issue with the media, which is where this crisis started for them. Also, by posting an apology only on their Chinese website, they are trying to minimize the publicity it gets to their other stakeholders and customers all over the world.

The food industry is handling the risk of food safety in China well. The regulatory bodies that have ordered Carrefour to be closed are setting precedence for other retailers to beware of similar consequences if they do not abide by food safety standards. Local authorities also shut down 13 branches of Walmart in the city of Chongqing for two weeks last October for selling regular pork labeled and priced as organic. Carrefour China should have been aware of this issue by doing an external scan of the industry they are in and using this as a crisis warning signal and should have ensured that they were following all food quality, safety and labeling guidelines. However, the American Chamber of Commerce in China and the European Union Chamber of Commerce in China have made statements saying that foreign firms are being singled out and unfairly targeted by local authorities. I don’t feel this is a valid point. If they weren’t breaking the rules in the first place, they wouldn’t give Chinese authorities the opportunity to close them down or “punish” them.  The reaction of the Chinese public is not mentioned in the article but I am sure that this will have a negative impact on Carrefour China’s sales and the amount of customers that they have, especially since this story was uncovered by the national media.

The rest of the food industry in China, whether retail outlets or fast food/fine dining restaurants should use this crisis to learn a lesson and ensure that they are avoiding a similar crisis by having strict quality control measures and ethical practices when it comes to labeling food. The Chinese authorities have been forced to take harsh measures and close certain stores/restaurants down because there is a large number of food safety violations that occur in China and this is their way of scaring the industry into putting the safety of its customers first. This is a way for the Chinese government to prepare and react to the food safety crisis that is currently occurring in China.

Personally, the mislabeling of meat as organic is not that big of an issue for me as I am okay with eating non-organic products. I feel this would be a big issue for some people that are very health conscious and choose to only eat organic. This would really upset them because organic products usually cost a lot more, so essentially the Carrefour has taken advantage of their food preferences without delivering the product that was promised. I am however, very concerned about Carrefour and McDonald’s selling food past its expiration/freshness date. As we have learned from the Maple Leaf case that occurred in Ontario, meat that is spoiled can have dangerous bacteria in it and can lead to serious health problems and death.

I would tell Carrefour, Walmart, McDonalds, and all of the other foreign firms that have branches in China to ensure that they are providing quality food that is safe to the public. I would tell them to work quality control measures into the process and ensure that a culture of safety and ethical behaviour is promoted within the staff. To the food industry in China, I would tell them that the government is taking the issue of food safety seriously so they should ensure they avoid a crisis such as this by making changes and improvements to their operations. To the government authorities in the food safety department, I would tell them to not only target foreign firms but also local firms so that they are protecting the public from harm in a more robust manner. To the public of China, I would advise them to only go to their trusted food providers and to avoid Walmart, Carrefour and McDonald’s for a while. These companies will only get the message to improve if they see that their bottom line is suffering.