Shanghai Husi Food Co., global supplier of chicken major international fast food restaurant chains that include McDonald’s and KFC, came under fire in July 2014 for unsanitary production practices and selling expired meat. News of the nefarious practices of the company are substantiated by a Shanghi TV station’s undercover camera recording of the company’s employees voicing concerns about repackaging expired “stinky” meat for resale.
The footage also displayed damning evidence of the company’s factory workers picking hamburger patties and meat from off the factory floor and throwing them directly into meat mixers. Workers are seen using bare hands to handle poultry and beef on the assembly line. Sewage and trash spread on the floor of the processing plant is also seen in the video.
The ensuing scandal quickly engulfed the China operations of two of China’s popular fast food outlets, McDonald’s and KFC, with over 2,000 and 4,400 locations in the country, respectively.
McDonald’s Japan reacted to the news by ceasing importing chicken from China, shifting to sourcing all its chicken to Thailand suppliers in order to address the concerns of its customers.
McDonald’s 3,000 restaurants across Japan serve eight dishes using chicken sourced from China, including Chicken McNuggets and Chicken Fillet-O.
Hong Kong’s McDonald’s restaurants have also taken chicken nuggets and chicken burgers off the menu after a mainland Chinese supplier was accused of selling expired meat. Hong Kong McDonalds’ representatives noted that they used chicken from a Husi factory, but it was not the Shanghai factory at the center of the initial allegations against the company. According to OSI,
Chinese authorities have inspected Husi’s other facilities, allowing us to confidently serve our customers,” the world’s largest hamburger chain said in a statement. They say they sourced chicken, beef, pork and lettuce from Shanghai Husi. Now, they plan to get such items from Husi’s “new state-of-the-art facility” in Henan.
For Yum! Brands, which owns KFC, Taco Bell, and Pizza Hut, the impact will probably be less severe. “The factory only supplied a very small number of restaurants,” Virginia Ferguson, a company spokesperson, said in an interview. Three of the company’s products—its cheese pork hamburger and BBQ hamburger are affected, at some KFC restaurants—and shortage of the stone pan Texas flavor beef at its Pizza Hut restaurants will be affected, according to a statement released by the company.
The meat scandal has not had an alarming backlash on the local establishments in China. Reporters for state-run China News Service found the Beijing outlets of McDonald’s and KFC still crowded the day after the report broke. Similarly, a report by Henan Radio in Zhengzhou, a city of 8 million in central Henan province, found that business at local McDonalds and KFC restaurants was “hopping” with long lines and few seats. One McDonald’s patron admitted that she saw the news about the food scandal but was desensitized to this sort of thing.
A general consensus among Chinese consumers is most native food establishments are suspect when it comes to quality. That consensus bolsters the credibility of foreign owned companies when it comes to quality control, and trusted product.
Chinese citizens tend to blame state regulators for the expired meat and unsanitary production environments. In recent months, authorities have pledged “stringent supervision” of food safety and considered revising the country’s food safety laws. Observers feel the latest scandal diminishes confidence those assurances are meant to flourish.
In response to state-run broadcaster China Central TV’s July 20 Weibo post about the scandal the most popular comment read, “This year, we have relied entirely on the media to reveal problems of quality. The regulatory agency might as well just close.” The Global Times, in a July 22 English-language op-ed suggested foreign fast food chains in China need a “new attitude,” conceding “quality oversight authorities are weak.” Sensitive to this backlash, state media have been careful to highlight the speed with which government regulators have acted in response to the report.
However, in light of Chinese customer support and apologies from McDonald’s and Yum! That did not stop the firms’ share prices from tumbling. Yum!’s sales in China reportedly dropped 40 percent after a 2012 report that alleged that its chickens were pumped full of antibiotics, and are still recovering.
McDonald’s, which plans to open another 300 stores in China by the end of 2014, is likely fearful of the potential for a similar fallout—especially if an aversion to American fast food companies is growing as quickly as some believe it to be.
However, both firms are almost certain to survive. These fast food chains offer something else to Chinese diners besides food. As one Weibo user wrote, “No matter what, the bathrooms at McDonald’s and KFC are definitely a public utility,” adding, “We can’t live without them!” As long as Chinese consumers remain eager to get in the door, the chains’ bosses can probably rest easy.