OSI Group to create 'quality control center' in Shanghai

Sheldon Levin (middle), chairman and chief executive officer of OSI Group, is pictured at a press conference in Shanghai on Monday, July 28, 2014. (Photo: China New Service)

The US owners of a Shanghai subsidiary at the center of an expired meat scandal said on Monday "swift and decisive" action would be taken against those responsible.

At a press conference in Shanghai, David McDonald, president and chief operating officer of the OSI Group, said its China operations would now become a part of OSI International instead of operating as separate entities.

The new OSI International China leadership will include expertise from its global operations "to ensure full compliance with the OSI Group's standards for quality," McDonald said.

He declined to give details of what the company had found at the Shanghai Husi Food Co plant following a TV report last week that it had been selling expired beef and chicken to restaurants including McDonald's and KFC.

However, he said an initial investigation had found issues "absolutely inconsistent with our internal requirements for the highest standards, processes and policies."

He added: "Why these things took place, by whom they took place and for what motives they took place, we simply can't understand."

The US company's Chairman, CEO and owner Sheldon Lavin said: "This is my company and events like these have a personal toll. They simply don't represent the values I stand for or those of my company."

He added: "We understand that we need to rebuild and again earn respect. We accept that there must be consequences and we take responsibility for the actions of those individuals working for our company."

The company said it was cooperating with the Shanghai Food and Drug Administration and was committed to a transparent and swift internal investigation.

McDonald said at least seven of its employees would have new responsibilities and would be complementing its existing China management to focus on operations, quality, compliance and auditing.

Last week, China's food safety agency said its investigators had found unspecified illegal activity and police had detained five Husi employees, including its product quality manager.

McDonald said OSI, based in Aurora, Illinois, would create a "quality control center" in Shanghai and spend 10 million yuan (US$1.6 million) on a food safety education campaign. He promised "swift action" to remedy problems once an investigation is complete.

The company said it was reviewing all nine of its Chinese plants in a bid to limit further damage after losing two major customers.

KFC and Pizza Hut parent Yum Brands Inc severed ties with OSI last week, Reuters reported, while the Japan and Hong Kong units of McDonald's said they were ending their relationship with the US meat processor's Chinese units following the allegations of expired meat being mixed with fresh produce.

China is McDonald's third biggest market by outlets and Yum's largest and is a big growth opportunity for foreign fast-food chains. But a series of damaging food safety scandals in recent years risks denting those prospects at a time when many Chinese look to foreign restaurants for better quality, Reuters said.

McDonald's, which has more than 2,000 outlets on China's mainland, took more meat dishes off its menus yesterday as it sought to fill the supply gap after OSI withdrew all Shanghai Husi products at the weekend.

At least three McDonald's outlets in Shanghai and Beijing stopped selling all or most of their meat products, Reuters said. Outlets in cities such as Tianjin and Wuhan were also hit, according to microblog postings.

A spokeswoman at McDonald's in China said its beef, chicken and pork products were affected at outlets across the country, though the level of impact varied.

In an e-mailed statement, McDonald's said it had withdrawn all products from Husi facilities in China since Friday. "As a result, we are now only offering a limited menu in our restaurants around the country."

The company said some of its China restaurants would resume offering a full menu in early August, while others may take a little longer.

One Shanghai Daily reader said yesterday he had tried to order food from two city outlets but was told that only spicy chicken burgers were available.

And at a McDonald's in the center of the city, Tan Qiang, 23, said: "I wanted to order chicken products today but they only had one type of combo and nothing else. I was disappointed not being able to eat what I want."

The Shanghai FDA said yesterday it had urged OSI to cooperate with its investigation and ensure food safety.

In an e-mailed statement, it also vowed to strengthen inspections to cover both the source of food and production processes.