to boost China supplier audits after food safety scandal
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[September 02, 2014]
SHANGHAI (Reuters) - McDonald's Corp
will increase the number of audits it conducts of suppliers in China,
the firm said on Tuesday, after a food scandal in July dented China
sales at the U.S. fast food chain and rival Yum Brands Inc.
In a statement emailed to Reuters on Tuesday, the restaurant chain
said half of the audits would be done unannounced and would be
carried out by third party auditors and internal teams.
Industry insiders had told Reuters that suppliers in China often
knew about audits in advance.
McDonald's will push for more video monitoring at its Chinese
suppliers and send more quality control specialists to all meat
production facilities, it added.
The firm has also created a new role to oversee food safety
governance in China and will launch a hotline later this year for
whistleblowers to report food safety issues.
Last week, Chinese police arrested six staff from McDonald's
supplier OSI Group Inc [OSIGP.UL] following allegations in July that
workers at its Shanghai Husi plant used expired meat and doctored
food production dates.
McDonald's has suspended supply from all Husi plants in China and is
reviewing its relationship with parent OSI pending an investigation
by Chinese regulators.
The OSI scandal dragged in KFC-parent Yum, coffee chain Starbucks
Corp and Burger King Worldwide Inc among others. It also spread to
Hong Kong and Japan.
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China is McDonald's third largest market by the number of outlets
and the number one market for KFC-parent Yum. McDonald's currently
has over 2,000 restaurants in mainland China.
However, China's $1 trillion food processing industry struggles with
fragmented suppliers and a lack of traceability, meaning auditors
and food chains often remain one step behind in keeping supply
chains in check.
(Reporting by Adam Jourdan; Editing by Miral Fahmy)
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