Wal-Mart executives quit in pork scandal

PUBLISHED : Tuesday, 18 October, 2011, 12:00am
UPDATED : Tuesday, 18 October, 2011, 12:00am

The head of retail giant Wal-Mart's mainland operations has resigned, along with another senior executive, following a mislabelling scandal that has led to the detention of 27 employees and the temporary closure of 13 branches in Chongqing .

The scandal has again focused attention on food safety on the mainland, with industry analysts saying the resignations were a gesture of obeisance to the authorities.

Wal-Mart said yesterday that Ed Chan, chief executive for China, and Clara Wong, senior vice-president for human resources, had resigned 'for personal reasons'.

Scott Price, president and chief executive of Wal-Mart Asia, will also head Wal-Mart China until a new chief executive is named.

On October 9, Wal-Mart was ordered to temporarily close 13 stores in Chongqing for 15 days and to pay 2.7 million yuan (HK$3.3 million) in fines after a probe into the mislabelling of tonnes of regular pork as more expensive 'organic' pork. The Chongqing Administration for Industry and Commerce said more than 63.5 tonnes of mislabelled pork were sold.

Wal-Mart has been sanctioned 21 times for selling expired food and other violations of food standards since it began operating in Chongqing in 2006. It was sanctioned eight times from January to August alone.

Chongqing police have detained 25 Wal-Mart employees and arrested two for the 'green pork' incident.

Christina Lee, Wal-Mart China's senior director of corporate affairs, denied there was any direct correlation between Chan's departure and the scandal in Chongqing, stressing Chan had resigned yesterday for 'personal reasons'.

Two weeks ago, Wong also submitted her resignation for 'personal reasons'. Industry analysts said, however, that the resignations were unlikely to be coincidental.

Shi Jun, a senior consultant with Beijing-based Alliance PKU Management Consultants, said Wal-Mart had punished some employees responsible for violations of food standards, and the latest scandal was 'the final straw that broke Wal-Mart's back'.

Shi said the resignation of Wal-Mart's top mainland executive showed the company wanted to demonstrate to the authorities that it was taking the offence very seriously. 'Foreign supermarkets have been trying to maintain good ties with the government because they are still facing all sorts of restraints to expansion,' Shi said. 'Food safety has become a sensitive issue and a shallow job will not satisfy the expectations of the government and the public.'

Earlier this year, Wal-Mart and French rival Carrefour were both ordered to pay up to 500,000 yuan in fines for overcharging on items in their stores.

Shi said Chan's resignation was also because of the declining fortunes of the company's mainland operations, which had fallen short of the firm's expectations.