Shuanghui Group

Risk Analysis of SHUANGHUI GROUP

Introduction

SHUANGHUI GROUP is the biggest meat-packing enterprise in China. Its head office locates in Luohe city, Henan province. It has a total asset of one billion dollars and fifty thousand employees. It’s estimated that SHUANGHUI butchers fifteen million live pigs and produces one million tons meat products per year. Its slogan is “We have 18 quality tests for every product so that we assure you 18 securities before our products go to the customers’ mouth. In 2007, SHUANGHUI group has encountered a big crisis as it’s reported that the local government found 50 affusion pigs in SHUANGHUI’s own slaughter plants. Many customers got shock from that event and choose other companies’ meat products instead. This event brought SHUANGHUI a big economic loss as its stock price decreased by 7 percent in 5 days and the direct sales loss is nearly thirty million dollars during that period. Moreover, the markets share also decreased by 5 percent in 2007.

Crisis Description

On March 15, 2011, CCTV (China Central Television) reported that their journalists videotaped 19 pigs fed on Clenbuterol were used in SHUANGHUI meat processing factory in Jiyuan city. This chemical can be fatal to human beings and it has been prohibited by the China Ministry of Agricultural in 2003. If animals eat the food contains this chemical materials, it will have a big impact on their metabolism. The aim of feeding animals on Clenbuterol is to improve their growth in a relative short period, lower their body fat and higher the lean meat by at least 10 percent. If human beings eat the meat which contains Clenbuterol, some side effects will pop out like nausea, feel dizzy and feel wobbly and rough and hand tremor etc.

As the report came out, the local police investigated the factory, tested all the pigs in that factory and found the test results of 47 pigs are positive. This event shocked all Chinese customers because nearly 70 percent of the Chinese...