McDonald's China switches to another subsidiary of scandal-hit OSI

McDonald's China said it will buy meat from another subsidiary of OSI Group to replace its original supplier, which is bogged down in a high-profile food scandal.

In a Thursday statement, the fast food titan announced it will terminate its business relationship with Shanghai Husi Food Co., Ltd, owned by U.S.-based OSI Group, and use Henan Husi as a new supplier.

Shanghai police have detained five people from the Shanghai company, including a quality manager, after investigations showed it produced 5,108 crates of meat products using out-of-date or moldy materials and sold them to fast food chains such as McDonald's, KFC and Pizza Hut.

McDonald's China said it will continue to accept supplies from Hebei Husi in north China before moving the supply chain entirely to Henan Husi.

In a Thursday statement from Sheldon Lavin, chairman of OSI Group, he described the factory in Henan Province as a "newest state-of-the-art facility" that reflects the group's "confidence and commitment in China."

"I sincerely apologize to all of our customers in China. We'll bear the responsibility of this misstep," he said.

Yum Brands, parent of KFC and Pizza Hut, said on Wednesday that it will stop buying products from all Husi facilities in China, including the Shanghai company.

It condemned the "organized, manager-led deeds which were illegal and dishonest" and promised that it will re-examine its supervision system over suppliers.

McDonald's China unit said Shanghai Husi intentionally concealed its misconduct from buyers.

Shanghai-based Dragon TV aired a news program on Sunday claiming that Shanghai Husi had supplied products tainted with reprocessed expired meat to a string of fast food chains and restaurants across China.

Zhang Hui, manager of Husi's quality department, confessed during investigations that the company has been engaging in the malpractice for years under tacit approval of senior managers.