Sources: Reuters, The Wall Street Journal

Reuters reported today that Wal-Mart Stores Inc. has recalled donkey meat sold at some outlets in China's eastern Shandong province after tests showed the product contained the DNA of other animals. The Shandong Food and Drug Administration explained that the donkey product contained fox meat.

In official posts on China's Twitter-like Weibo site, Wal-Mart said it will reimburse customers who bought the tainted "Five Spice" donkey meat and is helping local food and industry agencies investigate its Chinese supplier, according to Reuters. The Wall Street Journal said that according to a Wal-Mart spokesperson, the company will provide compensation of 50 yuan (about $8.25) to consumers who purchased the contaminated product, and is boosting its own DNA testing for meat products sold in its China stores.

The Reuters article pointed out, "The scandal could dent Wal-Mart's reputation for quality in China's $1 trillion food and grocery market, where it plans to open 110 new stores in the next few years. China is the largest grocery market in the world and is set to grow to $1.5 trillion by 2016, according to the Institute of Grocery Distribution."

Reuters quoted Shaun Rein, Shanghai-based managing director of China Market Research (CMR) Group. as saying, "This is another hit on Wal-Mart's brand, meaning wealthy shoppers will start to lose the trust they had before." CMR estimates that Wal-Mart's market share fell from 7.5 percent to 5.2 percent over the last three years.

Reuters also reported:

Wal-Mart said it had set up an investigation team to look into the incident, would strengthen food safety rules and take legal action against the product supplier. It added the person in charge at the supplier factory had already been detained.

"We are deeply sorry for this whole affair," said Wal-Mart's China president and CEO, Greg Foran. "It is a deep lesson (for us) that we need to continue to increase investment in supplier management."

The U.S. retailer has had a troubled past in China. In 2011, China fined Wal-Mart, along with [French grocery chain] Carrefour, a combined 9.5 million yuan ($1.57 million) for manipulating product prices. Wal-Mart was also fined that year in China for selling duck meat past its expiry date.

Donkey meat is a popular snack in some areas of China, although it only accounts for a tiny fraction of overall meat consumption. In 2011, China slaughtered 2.4 million donkeys, according to country's livestock industry yearbook.