Wal-Mart China recalls tainted Five Spice donkey meat

Wal-Mart Stores Inc is recalling Five Spice donkey meat sold at some outlets in China after tests showed the product contained the DNA of other animals.

Wal-Mart has announced it will reimburse customers who bought the tainted donkey meat and is helping authorities in eastern Shandong province investigate its Chinese supplier, the firm said late on Wednesday on China’s Twitter-like Weibo.

The Shandong Food and Drug Administration earlier said the product contained fox meat.

The scandal could dent Wal-Mart’s reputation for quality in China’s $1 trillion food and grocery market where it plans to open 110 new stores in the next few years. China is the largest grocery market in the world and is set to grow to $1.5 trillion by 2016, according to the Institute of Grocery Distribution.

“This is another hit on Wal-Mart’s brand, meaning wealthy shoppers will start to lose the trust they had before,” said Shaun Rein, Shanghai-based managing director of China Market Research Group. CMR estimates Wal-Mart’s market share fell from 7.5% to 5.2% over the last three years.

Donkey meat is a popular snack in some areas of China, although it only accounts for a tiny fraction of overall meat consumption. In 2011 China slaughtered 2.4 million donkeys, according to country’s livestock industry yearbook.

Wal-Mart, French grocer Carrefour SA, McDonald’s Corp and KFC-parent Yum Brands Inc among others, have come under fire before in China over food safety issues, a sensitive topic in a country riddled with scares from a fatal tainted milk scandal to recycled “gutter oil” used for cooking.

Wal-Mart said it had set up an investigation team to look into the incident, would strengthen food safety rules and take legal action against the product supplier. It added the person in charge at the supplier factory had already been detained.