US food supplier OSI Group said Monday it had begun laying off more than 300 workers at a Shanghai plant shut down by Chinese authorities over expired meat sold to fast food giants.
OSI said 340 people would be made redundant, both direct employees and contract workers, at Shanghai Husi Food Co., a statement said.
The unit operated a facility closed by Shanghai officials more than two months ago for mixing out-of-date meat with fresh product. Authorities have arrested six employees involved in the case, but neither police nor the company have identified them.
OSI's clients in China originally included McDonald's, KFC, Pizza Hut, coffee chain Starbucks, Burger King, 7-Eleven convenience stores and Papa John's Pizza.
The OSI statement said the plant was unlikely to resume operations in the near future, but stopped short of saying it would be shut permanently.
"It is very unlikely that production will be resumed soon," the statement said.
"A small number of staff, however, must be retained in order to assist with the on-going authorities' investigations  -- as such, Shanghai Husi cannot be fully shut down at this stage," it said.
The Chinese government is now investigating OSI, while the US company is also conducting its own internal probe after shaking up its management in China.
The Shanghai Food and Drug Administration, one of the agencies investigating the case, said on Monday that OSI was responsible for the incident and urged more cooperation in the probe, according to a statement on its microblog.
The scandal came to light after an investigative report by a Shanghai television station aired on July 20 showed workers on the production line scooping meat off the floor and putting it back into processing machinery.
The workers had been on paid leave since the day after the report aired and Shanghai authorities swooped on the factory. The US company would make severance payments to laid off workers, the statement said, but gave no amounts.
The investigation of OSI comes amid greater scrutiny of foreign companies in a range of industries, including the technology, pharmaceutical and auto sectors.