Food Processor OSI Faces Fresh Setback in China

By Laurie Burkitt 

BEIJING--U.S.-based food processor OSI Group LLC has suffered a new setback in China, as it works to rebuild its business following accusations that it sold past-due food.

The Shanghai Food and Drug Administration said on its website Sunday that it was destroying batches of "questionable products" that were recalled from OSI division Shanghai Husi Food Co., a former supplier for McDonald's Corp.'s China business, following an investigation of the company that was launched in July.

OSI said in a statement that it is disappointed in the agency's actions and that it doesn't want the disposal to be seen as an admission of food-safety problems. "We view this statement to be very misleading as its use does not meet the definition of 'questionable products' as set forth by the China Food and Drug Administration," the statement said.

The statement said OSI fulfilled its commitment to withdraw "qualified products" in a voluntary recall.

The food and safety watchdog didn't respond to requests for comment. OSI didn't respond to a request for additional comment.

The food supplier is seeking to regain ground in what has been one of its key growth markets. Last summer local Chinese media reported that workers at its Shanghai Husi plant doctored food production dates to resell meat that had passed sell-by dates. Following the report, Chinese authorities closed the Shanghai plant and opened an investigation. McDonald's China arm, among other customers, dropped the supplier.

OSI Chairman Sheldon Lavin issued a statement saying that what happened at the plant "was terribly wrong, and I am appalled that it ever happened in the company that I own." The company laid off 340 employees at its Shanghai Husi plant in September.

Closely held OSI, of Aurora, Ill., said in its Tuesday statement that the company has worked to eliminate "any possibility of the public's groundless doubt and concern over products relating to the Shanghai Husi incident."

OSI in 2013 opened its ninth and 10th China plants, part of a $750 million investment to become one of China's biggest poultry producers. The plants, before the incident, had been processing 50,000 tons a year of chicken, beef, fish and vegetables. It isn't clear how much they are currently processing.

Fanfan Wang

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