BEIJING — Wal-Mart Stores Inc.’s China chief executive officer and senior vice president for human resources have resigned in the wake of a food-labeling scandal that has touched the very heart of China’s ongoing food safety issues.
The company said Monday that Ed Chan, president and ceo of Wal-Mart China, and Clara Wong, the company’s senior vice president for human resources in China, have stepped down. The company said the ceo left for “personal reasons” and did not give a reason for Wong’s departure. Wal-Mart declined further comment.
Scott Price, president and ceo of Wal-Mart Asia, will step in as interim head of the company for China while continuing his current duties, according to the retailer. Price joined the firm in 2009.
The resignations come shortly after government officials alleged the retailer was selling ordinary pork and fraudulently labeling it as organic. Wal-Mart did not reference the pork issue in its statement.
In Chongqing, some 37 company employees have been detained and two arrested. Also, 13 local Wal-Mart stores were closed. Officials in Chongqing say the stores will reopen Oct. 24, after a 15-day sales suspension. The pork mislabeling was reported to have happened over a two-year period, and it is unclear whether the employees will face serious charges.
Though no critics would speak on the record about the situation, some have said Chongqing’s organic pork sting was part of a larger atmosphere of political gamesmanship. The head of Chongqing Municipality, Bo Xilai, is believed to be aiming for a seat on the country’s powerful Politburo and has made a career in Chongqing with sweeps against the region’s powerful organized crime rings. Wal-Mart’s targeting as a problem in the food supply chain is the first example of a major foreign retailer falling to the issue.
Yao Wenqi, a retail analyst with Great Wall Securities, said the resignation shows “Wal-Mart is serious about the pork scandal. It will take some time to recover Wal-Mart’s image. But its image has always been positive among Chinese consumers, so that won’t be a big problem.”
Food safety is a major issue for Chinese citizens, barraged by near-weekly scandals about the food supply from the widespread and deadly contamination of infant formula in 2008 to smaller incidents like the rampant reselling and use of old cooking oil. In recent years, everything from dumplings to beef has been called into question for fake ingredients and shoddy safety standards. Critics have said recent moves by the government have done little to clean up the food supply and corruption and fake products remain common.
A recent report in Chinese media found that most products labeled as organic don’t actually meet certification standards. The Guangzhou Daily reported that repacking of normal food as “organic” is widespread, as many producers do not want to spend time or money on licensing procedures.
In his statement, new interim Wal-Mart China ceo Price referenced none of the problems but only the positive.
“We recently celebrated our 15th anniversary in China, and there is a lot to celebrate about our business here,” said Price.
A vast expansion in recent years has made Wal-Mart one of China’s biggest retail chains, with 353 stores in 130 cities.
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