McDonalds, Carrefour Latest Targets in Consumer Assault 家乐福、麦当劳被中国政府“点名

By newsdoug on March 16, 2012

I have to admit, I’m starting to strangely enjoy China’s latest campaign that has big state media — CCTV in particular — chasing big-name foreign companies in a bid to improve the country’s record for food safety. You may ask why I feel this way, as I also believe that these foreign companies being targeted are much more responsible in terms of food and product safety than many Chinese firms. The answer is because these foreign companies are so high-profile that they quickly capture national and global headlines, drawing attention to the issue and providing a warning for smaller Chinese companies that are engaged in much worse violations. At the same time, these big foreign companies have the resources to easily weather such negative publicity, which is usually quite short-lived as I suspect that all sides know these cases are designed more to draw attention to the issue than to actually punish the big foreign firms. The latest such high-profile attack has come this week against 2 industry titans, leading French supermarket and general merchandise seller Carrefour (Paris: CA) and fast food giant McDonalds (NYSE: MCD). (English article) According to Chinese media reports, CCTV has run a story attacking Carrefour for mislabeling ordinary chicken as a premium product at some of its stores, while McDonalds was guilty of selling chicken wings past their permitted sale period at a Beijing store. Both instances look quite trivial to me, as clearly no one’s safety was threatened by these practices. I suspect food safety officials will quickly investigate the matter and perhaps slap both Carrefour and McDonalds with small fines to show everyone that any kind of mislabeling or other misrepresentation is unacceptable. Meantime, business will quickly return to normal, as the public already considers these large multinationals much more reliable in terms of food safety than most domestic chains and local eateries. This latest attack follows a string of similar investigative reports from CCTV, including a “scandal” that erupted late last year when China’s leading TV operator revealed that Wal-Mart (NYSE: WMT) had committed the “grave offsense” of mislabeling regular pork as organic. (previous post) Likewise, KFC (NYSE: YUM) also came under attack last year for selling soy milk made from powder rather than fresh product, even though the company had never even claimed that its soy milk was fresh. In both instances, the news created a small storm for a few weeks before quickly blowing over as business returned to normal. I’m sure that investigative reporters from both CCTV and other major news outlets will continue to scour Beijing and other big cities in search of the latest minor violations by major western companies. Such attacks are likely to do little damage on such big corporations, and could even help them win points with the government and food regulators who conveniently use them as models to send a broader message to the market on the importance of food safety and intolerance for businesses that threaten public health.

Bottom line: New media attacks on McDonalds and Carrefour are part of a broader government food safety campaign, and will have little effect on these global corporate giants.

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