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China's Wal- Mart to Increase Food Safety Budget to 300 Million Yuan

Date:18-06-2014

Wal-Mart Stores Inc, which is the world's biggest retailer, said that it will increase its spending in China on food safety to $48.32 million between 2013 and 2015. This amount is three times the $16 million the corporation had previously earmarked to spend during that period.

Wal-Mart said that it will also increase supplier inspections, test more of its stores with its two mobile safety labs and also do DNA testing on meat products.
 
China's grocery and food market which is set to reach $1.5 trillion by 2016, is very vital for retailers such as Wal-Mart. Food safety is one of the primary issues in the Chinese food and grocery market.

French company, Carrefour SA , Yum Brands Inc, a parent company of KFC, McDonald's Corp and Wal- Mart are among some companies who have been criticized on the issue of food safety. Food safety is a very sensitive issue in China which has faced a number of food-related scandals in the past such as melamine-tainted milk and cadmium-tainted rice.

Wal-Mart’s reputation in China for food safety came under a lot of flak earlier this year when its "Five Spice" donkey meat was found to contain fox meat.

CEO and then-president of Wal-Mart’s China business Greg Foran said that it was a good reminder to invest more in supplier management.

In 2011, Wal-Mart was fined for selling expired duck meat. In China, the company has around 7,000 food suppliers. In recent years, it had cut down 4 percent of its supplier chains for failing various food safety tests or audits.

Paul Gallemore, Chief Compliance Officer of Wal-Mart China said that, they face similar challenges in China that all other retailers face when it comes to sourcing products. Gallemore added that Wal- Mart’s contact with Chinese food safety regulators is presently on an "ad hoc" basis; however it hopes to have more regular meetings.

Wal-Mart which operates over 400 facilities in China, and also competes with established market leaders such as Sun Art Retail Group Ltd and China Resources Enterprise Ltd, who in 2013, had teamed up with Tesco Plc, a British retailer.

The company said that between 2014 and 2016, it would launch 110 new stores in China and was also looking to close down 15 to 30 others in the next 18 months.

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