Fast-food supplier in limbo

By Chen Qingqing in Dachang Source:Global Times Published: 2015-7-17 0:03:17

Fate of OSI Group processing facility in Hebei Province remains uncertain

A security guard plays with his smartphone at the OSI factory in Dachang county in Hebei Province on Wednesday. Photo: Chen Qingqing/GT

Almost a year after media reports exposed a scandal that affected major fast-food chains such as Yum! Brands Inc and McDonald's, US-based food processor OSI Group's subsidiaries in China have not fully recovered.

About an hour's drive from Beijing, OSI China's factory is located in Dachang Hui Autonomous County in Hebei Province.

At the main entrance of OSI Group's factory in Dachang county on Wednesday afternoon, a security guard was playing with his smartphone. For almost an hour, nobody entered the building.

"Only a few people come and go every day and I don't see any workers," a 20-year-old security guard who declined to be identified told the Global Times Wednesday.

An employee surnamed Gao who works at a real estate agency next door told the Global Times she had not seen workers enter or leave the factory for almost a year.

"And I don't see any recruitment information posted by that factory on our local job forum," she said.

OSI Group's customers have already been snapped up by other food companies, such as COFCO Corp, Ma Wenfeng, an analyst at Beijing Orient Agribusiness Consultant, told the Global Times Thursday.

"One company's food safety scandal won't shut down the country's whole fast-food supply forever," Ma said.

"OSI has made mistakes," said a senior manager on condition of anonymity in charge of the factory in Dachang county. The manager said all the workers had been sent on indefinite leave, without any notice of when they would be recalled to work.

A public relations representative for the company who also declined to be identified told the Global Times Wednesday, "As media reported, several employees from Shanghai Husi were arrested last year and the investigation into the case is still open. We don't have any further information to share with the public at the moment."

Given the information available from an online company registry, the factory of OSI Group in Dachang county is still operating, an employee surnamed Wang from the Langfang Administration for Industry and Commerce, which governs companies in Dachang, told the Global Times Thursday. "We've only launched two random inspections in 2015 and neither targeted that factory," he said, noting that the factory's status was unclear.

The Dachang factory was established in 1996, according to the website of OSI Group. It covers about 37,000 square meters and has five production lines and three processing workshops for chicken and beef, the website said. The annual production capacity is about 50,000 tons, and it employs more than 700 people.

Another subsidiary of the OSI Group, Shanghai Husi Food Co, reportedly reprocessed meat products that were beyond their expiration dates and supplied them to fast-food chains including KFC and Pizza Hut, according to media accounts in July 2014. Authorities investigated and halted production at Shanghai Husi.

Members of the management team of OSI Group held a press conference a week later and announced that the company would make fundamental changes in its operations in China, according to the Xinhua News Agency.

OSI Group in China lost nearly 6 billion yuan ($966 million) following the food scandal, Xinhua reported in June. The company is building an Asian quality control center in Shanghai while planning to establish an OSI China food safety foundation to improve public food safety awareness, according to Xinhua.

KFC, which was a major client of OSI Group, released an announcement via a Weibo post in August 2014 that said the company was determined to sever its relationship with the OSI Group.

"The company's supplier strategy remains unchanged today," a KFC PR representative told the Global Times Wednesday, speaking anonymously.

OSI turmoil

Jul 20, 2014 Shanghai Husi was reported to be mixing expired meat with fresh meat and selling it to fast-food giants, including McDonald's and Yum, owner of KFC.

Jul 24, 2014 McDonald's stopped partnering with Shanghai Husi, and turned to OSI's facilities in other regions of China.

Aug, 2014 Six senior executives were arrested after the company was investigated.

Sep, 2014 Some 340 employees at Shanghai Husi were dismissed.

Jun 30, 2015 A senior official of OSI China said from last July until now, the company has suffered a loss of about 6 billion yuan and many factories are still suspended.

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