PICT0133Remember that steak you had back in the 1970s? If you were in China this week, you might have seen a cut from the same animal.

Nauseating as that may sound, it’s nothing compared to the reality. China has arrested gangs of smugglers and seized well over 110,000 tons of half-frozen or thawing chicken, beef and pork, some of which have been around for forty years. The frozen meat was being transported into China via Vietnam and Hong Kong in non-refrigerated trucks, thawing. It is then sold to grocery stores, refrozen, and sold to the public.

It’s a burgeoning business – this month alone, Chinese officials confiscated $500 million in frozen meat products. Yet it’s not limited to China. Within the last 12 months, Chinese officials have  stopped the transport of beef from Brazil and even the US.

While it may seem this is a problem limited to China, for US businesses with Chinese operations, it’s a disaster waiting to happen, or, in the case of some US companies, an already real exposure they’re recovering from. In the news earlier this year, McDonald’s, KFC, Pizza Hut and Starbucks were in the news when out-of-date meat products showed up in their stores. Ironically, the supplier was a US-owned meat factory.

Talk about a reputational nightmare.

With so much of our business being conducted a world away, it’s easy to overlook the issues that come with such an arm’s-length business connection. Still, it’s not impossible to manage the risks.

  • Assess the risks
  • Know your suppliers
  • Build solid policies
  • Have someone onsite who’s accountable
  • Know when to move operations or replace substandard suppliers

Risk managers, how do you reduce your offshore risks?

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