China tainted-chicken probe may hurt profit

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New Hope Liuhe Co., China's biggest poultry meat producer, said sales and profits may be affected after a media report said one of its subsidiaries supplied broiler chicken laced with excessive antibiotics.

The company shut the deep-freeze plant, located in Pingdu city in northern Shandong province, and is cooperating with a government investigation, New Hope Liuhe said in a statement to the Shenzhen Stock Exchange dated Dec. 29. The company "deeply expresses apologies" to consumers for the negligence of duties by its employees, it said.

State-broadcaster China Central Television prompted greater scrutiny of the nation's poultry industry this month when it reported Liuhe and other suppliers, which sell chicken to companies including Yum! Brands Inc. and McDonald's Corp., weren't properly inspecting chicken bought from farmers for antibiotics and hormones.

"Liuhe will increase its inspection equipment and ensure a comprehensive test system is in place," it said in the statement.

Beijing's municipal government will introduce a strict food-safety law, including banning producers and vendors for life if they are found to be making or selling unsafe food, Xinhua News Agency reported Dec. 28, citing the legislature.

Shanghai's government is also considering harsher punishments for companies that violate food-safety rules, Xinhua has reported.