McDonald's China Will Likely Continue Using Scandal-Ridden Food Supplier

By Michelle FlorCruz - The Chinese stores of McDonald’s Corporation (NYSE:MCD) will allegedly continue using food from plants owned by its scandal-ridden supplier, OSI Group LLC, because the meat is still considered better than local alternatives. Unlike fast-food conglomerate Yum! Brands Inc. (NYSE:YUM), which owns the KFC and Pizza Hut restaurants and has cut all ties with the supplier, McDonald’s is responding to the scandal by using a different OSI plant.

According to an anonymous source within McDonald's, the fast-food giant is switching from OSI's Shanghai Husi Food Co. plant, to an OSI-owned plant, Henan Husi, in China’s central Henan province. The Shanghai plant has been hit by widely publicized allegations of supplying local fast-food chains with expired meat.

“For us, it is risky to find a local supplier to guarantee the quality, and the risk may even higher [not sticking with OSI],” the McDonald's source told China Business News. “Moreover, OSI has made a promise about the quality and safety [of future products].”

McDonald’s will rely on Henan Husi and a third undisclosed Husi plant to fulfill its meat supply needs until all of the supply chain can be moved to the Henan Husi factory.  OSI, which is also currently under fire for separate violations in its American factories,  is insuring that the Henan Husi plant will be up to par with the company’s food standards. The Henan Husi factory has reportedly undergone an inspection by local Chinese authorities and been found to have no food or safety issues. Sheldon Lavin, the CEO of OSI, described the Henan plant as one of the company’s “newest state-of-the-art" facilities, according to the report.

 McDonald’s vice president of global media relations, Heidi Barker Sa Shekem, did not confirm to the International Business Times that the company would continue its relationship with the local Husi suppliers in the new Henan location.

“The investigation continues and we are closely monitoring the situation,” Sa Shekem said via email about the recently revealed OSI scandal.  When asked specifically if the scandal-hit supplier was still considered to be a less risky option compared to other local options, Sa Shekem responded, “We require all of our suppliers to follow rigorous quality and food safety standards everywhere we do business.”

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Considering OSI's long relationship with McDonald’s, which began in 1955 when OSI became McDonald's first beef supplier, such reports are not far-fetched. “While we are stunned and disappointed by the situation in Shanghai, together with our supplies, we stand on McDonald’s decades-long proven track record of food safety around the globe,” Sa Shekem said.