Many Americans take the safety of their food supply for granted, but that isn’t the case in China, a nation characterized by open air wet markets and a regulatory environment in which it can appear foreign companies are held to a higher standard.
Walmart operates 402 stores in China and a rapidly growing online business under the Yihaodian brand name. It plans to get bigger and understands that customer trust will play a key role in whether growth plans are realized. This week the company which has operated in China for 18 years took a big step in that direction with a high profile move to increase its investment in food safety to $48.2 million between 2013 and 2015 from an earlier level of $16 million. The company made the announcement as part of a campaign called, “Food Safety: We all have a role to play,” at a supercenter in Beijing as part of China’s national Food Safety Week.
“This increased investment reflects our growing commitment to enhance food safety management in the supply chain and in all our stores,” said Walmart China chief compliance officer Paul Gallemore. “As a result, Walmart hopes to provide even greater assurance of food product quality, authenticity and safety to our customers.”
The increased investment will allow Walmart to do some things in China that are commonplace in the U.S. as well as some unconventional measures. For example, the company will perform additional testing and implement tougher standards for suppliers in 2014 by increasing DNA testing on meat products by 100% and facility audits and inspections of primary producers by more than 30% from 2013. The number of facility audits and inspections of primary producers were already up 50% in 2013 from a year earlier. Walmart China said it performed more than 400 DNA tests for meat products, close to 1,400 third party audits and inspections of farms, factories, processing centers, slaughterhouses, and more than 50,000 product tests in the company’s distribution centers.
Another boost to food safety is expected to come from more goods flowing through Walmart’s own distribution center network. Walmart now has nine fresh distribution centers across China in Shenzhen, Guangzhou, Shanghai, Beijing, Chengdu, Hangzhou, Wuhan, Shenyang and Xiamen. That means Walmart is able to test products at the DCs for compliance against safety and quality standards in a lab environment to ensure consistent quality control and that unqualified products can be detected before they arrive at a store. Two additional fresh distribution centers will be added by the end of 2014 enabling the company to serve every store in the country from its own DC network. More than 139,000 tests were conducted at the company’s DCs in 2013 and already in 2014 129,000 tests have been conducted.
Another novel approach to food safety involves the use of technology. For example, later this year plans call for the introduction of a record keeping system called, “SPARK” (Sustainable Paperless Auditing and Record Keeping). The technology has been used successfully in Walmart’s U.S. business to provide timely monitoring of food storage temperatures through measuring devices that communicate wirelessly. The temperature and other measurements are automatically updated for analysis and monitoring. Mobile labs, introduced last year, are also being expanded. The first mobile lab conducted over 35,000 tests on food in stores in Guangdong and a second mobile lab was launch in Shanghai last year. The two labs now serve 147 stores.
Lastly, Walmart said it has developed a compliance team that includes 100 retail expects that it expects to strengthen further.