Pulling a fast one on fast food

On the morning of July 29, customers arriving at the McDonald's in the Ganjiakou area of Beijing's Haidian District were disappointed to find that the store served nothing more than drinks and taro, pineapple and potato pies.

"Chicken nuggets and hamburgers are not available," said a female clerk, pointing at prominent signs posted on every cash register on the check-out counter, which stated McDonald's commitment to food safety and said that availability of these products will be resumed as soon as possible.

On July 28, McDonald's announced that it had stopped purchasing products from all Husi food factories in China; on the evening of July 20, Shanghai-based Dragon TV aired a program exposing Shanghai Husi Food Co. Ltd. for using expired and substandard meat.

Eighteen tons of frozen chicken skin and breast that expired half a month ago were ground up, coated with layers of starch paste and fried into the chicken nuggets that would later be shipped and served at McDonald's restaurants.

Veal chops that expired seven months ago were repackaged, with the original expiration date prolonged for another year. Meat products of inferior quality were blended into and sold as regular products.

These images, along with others shot at Shanghai Husi Food Co. Ltd., have shocked Chinese consumers, especially those who frequent Western fast food chains.

Shanghai Husi was the main meat supplier for a number of big-name international fast food brands with strong presence in China. The scandal has dragged a number of them into the fray with it—including McDonald's, Pizza Hut, Kentucky Fried Chicken (KFC) and Burger King.

Western fast food chains are popular among Chinese consumers. China is the third-largest market by number of restaurants for McDonald's and the top market by revenue for Yum! Brands—which owns Pizza Hut and KFC, according to Xinhua News Agency. Yum! Brands, Inc. also announced that its KFC and Pizza Hut restaurants had stopped using meat supplied by OSI China Holding Co. Ltd. (OSI China), which is a subsidiary of OSI Group, a US-based global food processor. In addition to Shanghai Husi Food Co. Ltd., OSI has a number of factories in other part of China such as Henan, Shandong, Hebei, Yunnan, Fujian and Guangdong provinces.

Undercover reporters from Dragon TV broke the story, which took them two and half months to capture on footage.

Responses

After the scandal was exposed, OSI China posted a statement from Sheldon Lavin, Chairman, CEO and owner of the OSI Group on its website. Lavin wrote, "What happened at Husi Shanghai is completely unacceptable. I will not try and defend it or explain it. It was terribly wrong, and I am appalled that it even happened in the company that I own."

He then apologized on behalf of Shanghai Husi Food and the OSI Group. "I sincerely apologize to all our customers in China. We will bear responsibility for these missteps, and will make sure that they never happen again. That is my commitment."

Lavin said that local Chinese authorities have inspected OSI Group's other facilities in China and have not found any issue.

On July 26, the OSI Group declared that it will withdraw all products manufactured by Shanghai Husi Food from the marketplace.

The multinational company said that it is "conducting a thorough internal investigation into any possible failures on the part of current and former senior management" and a new management team has been brought in to China to ensure that operations run effectively.

At 7:30 pm on July 20, shortly after the program was aired, investigators from Shanghai Municipal Food and Drug Administration (Shanghai FDA) arrived at Shanghai Husi Food.

Law enforcement personnel ordered the company to suspend production, and confiscated all paper and electronic production records, as well as all ingredients and finished products in the warehouses. They also questioned staff and talked to the head of OSI China.

Meanwhile, the Shanghai FDA launched an all-out inspection on meat producers and fast food chains in the city and demanded fast food chains remove any potentially contaminated or affected products from their shelves.

On July 22, the food and drug safety watchdog released its preliminary investigation report, saying that Shanghai Husi Food was suspected of illicit production. It had talked to 22 fast food companies and found that the problematic products had been supplied to nine of them. The authority already seized five batches of meat products containing a total of 5,108 boxes including chicken nuggets, veal chops and meat pies. Seized products weighed approximately 100 tons in total.

Gu Zhenhua, Deputy Director of Shanghai FDA, said that they found some of the company's malpractices were not the choice of any single individual, but instead were that of the management.

On July 26, the Shanghai FDA released updated investigation results. As of July 25, it had inspected 1,181 companies producing or selling food, and seized 144.1 tons of tainted products in total.