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[9 comments]

Walmart's Recall Heard Around the World Wide Web

January 3, 2014

When I first heard about Walmart's recall of "Five Spice" donkey meat in China, I thought that it could spell trouble for the company in that country. It didn't immediately occur to me, however, that it might have any effect outside Chinese borders. That changed when one of the resident consumers in our household asked if I had heard that Walmart was selling donkey meat ("Who would eat that?") and that it contained fox meat instead ("That's disgusting!").

After explaining that different cultures view various animals differently than we do as a food source, I further explained the steps that Walmart was taking to address the situation. The retailer, having seen what a food safety scandal did to KFC in China, took quick action to recall the tainted product and promptly announced it would begin DNA testing of all meat it sells in China from local suppliers. The chain said it is considering legal action against the supplier of the tainted meat, Dezhou Fujude Food Company Ltd.

When I asked how our shopper had heard about the story, I got the typical answer: "Twitter."

Had the story affected our shopper's view of Walmart? "No, but I don't like to shop there anyway."

FINANCIALS:     [NYSE:WMT] [ ]

Discussion Questions:

Do multinational retailers such as Walmart need to worry about how problems in countries outside the U.S. play to the domestic market? Are you satisfied with Walmart's response to the tainted donkey meat issue in China?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Are you satisfied with Walmart's response to the tainted donkey meat issue in China?

Comments:

We no longer live in a village. We now all live in the global village.

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Mel Kleiman, President, Humetrics

Absolutely. While different countries have different standards and food tastes, for some consumers this won't sit well as the headlines, which is now what many of us read, often times sensationalize the news.

While I am fine with Walmart's response, that doesn't mean my opinion is sufficient for everyone else and I think there will be some consumers who hear this and view the company in a less favorable light.

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Bill Davis, Director, MB&G Consulting

Multinationals DO need to be aware (worry) about how their business practices will be perceived by those that are outside of the immediate region/country of the practice. We are becoming so wired, connected, immediately communication-abled, etc. that there are no secrets (for long). By way of analogy, if the finger is gangrenous - the whole body is in jeopardy.

The response is appropriate - better would be avoiding having to address it because of oversight and standards imposed - but once it occurred, the response is appropriate.

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David Zahn, Owner, ZAHN Consulting, LLC

Yes, social media now makes local news national. What this illustrates is that the food supply-chain integrity is going to be a concern for food retailers going forward, since they can't defer to supplier responsibility anymore, especially internationally where regional laws differ.

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Kenneth Leung, Director of Enterprise Industry Marketing, Avaya

The way a scenario like this usually works is an inexperienced buyer sees a stupid price for meat product and makes a quick buy to cash in on profits. So who looks stupid now? The whole company! When you cut costs on product, services and people, disasters like this are just a matter of time.

'gjarnoldjr'

Walmart did what they needed to do; whether it's real or symbolic, that's another issue, but I'm satisfied. Walmart has never had a stellar meat reputation in any country, particularly the USA. I think many Americans just shrug their shoulders and think no big deal. Especially those who have visited the butcher shops in America's Chinatowns.

David Livingston, Principal, DJL Research

"Had the story affected our shopper's view of Walmart? 'No...'"

I won't go do far as to say it's impossible for problems to cross borders, but I certainly don't think this one did; and that, of course is the beauty - as well as the problem - of "Twitter" news: here today, gone tomorrow (or more like gone in sixteen minutes).

Craig Sundstrom, CFO, Weisner Steel Products

While Walmart's response will probably be accepted and the attention will fade, there is a clear reminder of the need for transparency across operations. Problems are broadcast around the globe, and domestic shoppers will react as they perceive the issue to possibly affect themselves and their families. Shoppers want to be reassured that food and consumer products are safe and appropriate measures are taken to ensure the safety of items sold.

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Anne Bieler, Sr. Associate, Packaging and Technology Integrated Solutions

Walmart acted promptly and effectively on this issue. Based on the Prosper China Quarterly data, an ongoing survey that Prosper has fielded in Mainland China since 2006, 48.0% of Adults 18-54 say they have become "more conscious about food safety." Adults who have a household income of 100000+ RMB (about $16,500+ per year), 61.6% say they have become "more conscious about food safety."

This is at topic that is part of the culture in China, whose consumer society is rapidly emerging. Walmart and Sam's Club stores are impressive - well-run, well-organized, and offering the type of value that the Chinese population has strongly embraced in the past 15 years. That's because Walmart proves to be a trustworthy retailer, while also providing products that you will not see in the U.S.

Having walked grocery stores in China 3 to 4 times per year, and watched Walmart's progress, I'll take the opposite position of Shaun Rein and CMR Research. Walmart's share has not declined in the past three years. It's grown. And, that share is well above 5.2% based on the Prosper China Quarterly. Walmart shoppers, more affluent, spent more on groceries in 2013 than 2011 on a monthly basis - over 630 RMB ('13) per month vs. 530 RMB ('11).

Not everyone enjoys the cuisine from Asia, Africa, India, or Europe. One man's delicacy is another's "I'll take a pass." That doesn't mean that merchants have erred in carrying the products. Walmart's listening to the consumer.

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Roger Saunders, Managing Director, Prosper Business Development

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