Food safety concerns raised in market access spat

By Mark Godfrey

- Last updated on GMT

WH Group claimed China's Market Supervisory Authority "misinterprets" the law
WH Group claimed China's Market Supervisory Authority "misinterprets" the law

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China’s WH Group's progress has stalled in its home market, despite international successes, due to the country's tough approach to food safety.

WH Group, also known as Shuanghui, is China's biggest meat company and the country's food safety stance has led to one big city blocking non-local meat supplies to guarantee meat quality to consumers.

Qian’an, a city in the north-eastern part of Hebei province in North China, has caused controversy by barring fresh pork from outside the city’s jurisdiction (the rule doesn’t appear to apply to packaged meat and snacks). A statement from the city’s Market Supervisory Authority stated: “Last September we started to crack down on excessive moisture problems with on-site inspections in markets, finding excessive amounts of antibiotics as well as water in some 202 batches sampled."​ The statement didn’t name any company as being responsible for these batches of meat.

Five local firms have had “no problem​” in complying with the new rules, according to the statement from Qian’an’s Market Supervisory Authority.

Based in the central province of Henan, Shuanghui has responded through legal channels, with the group’s senior legal counsel, Tang Quan Cheng, saying the Qian’an authorities have misinterpreted Chinese law and contravened national anti-monopoly laws. The national China Food and Drug Administration, rather than municipal market quality inspectors, has the power to close access to meat supplies in local markets, according to Tang. Shuanghui has filed a complaint to the China Food and Drug Administration (CFDA).

Public confidence low

Chinese local and national officials have been keen to show they are enforcing the country’s revamped food safety law, which came into force last October as part of an effort to restore public confidence in domestic food companies and suppliers. The law allows for jail sentences for individuals found to be endangering public health by knowingly supplying food that falls short of national standards.

However, there has been frequent confusion over who has primary responsibility for enforcing the law. The Chinese summary of the legislation has suggested it was the China Food and Drug Administration, a body modelled on its US counterpart. In the Qian’an case, however, it appears that the city’s Market Supervisory Authority – which regulates retail outlets – made the rulings on pork market sales. This, said Shuanghui’s legal counsel, “misinterprets​” the law.

All of this is happening alongside a government-encouraged shift from wet markets to chilled meat sales. Shuanghui became a household name in China, thanks to its high-temperature meat products, which are a favourite low-cost snack in convenience stores and canteens nationwide. In recent years however the company has sought to tap growing demand for packaged low-temperature meat products, as well as fresh meat and frozen meat.

China’s meat giant

Helped by rising prices for pigs (it also operates breeding and fattening farms) and pork, Shuanghui announced first-quarter profits rose by 16.65% year on year to RMB1.07 billion.

Henan Shuanghui Investment & Development Co is the China-listed subsidiary of the Shuanghui Group, which was renamed WH Group after the takeover of US meat firm Smithfield in 2014. The WH Group is listed in Hong Kong, but the Chinese-listed Henan Shuanghui Investment & Development Co controls much of the firm’s meat processing and slaughtering businesses in China. Henan Shuanghui Investment & Development Co’s RMB70.6bn capitalisation makes it the giant of China’s meat sector. It dwarfs other leading pork processors like Shandong Longda, which has a capitalisation of RMB6.3bn.

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