People walk by a McDonald's store in downtown Shanghai July 31, 2014.[Photo/Agencies]

McDonald's Corp will increase the number of inspections it conducts of suppliers in China, the company said on Tuesday, after a food scandal in July dented China sales at the US fast food chain and rival Yum Brands Inc.

In a statement emailed to Reuters on Tuesday, the restaurant chain said half of the audits would take place unannounced and be carried out by third-party auditors and internal teams.

Industry insiders had told Reuters that suppliers in China often knew about inspections in advance. McDonald's also will push for greater video monitoring at its Chinese suppliers and send more quality control specialists to all meat production facilities, it said.

The firm has created a new position to oversee food safety governance in China and will launch a hotline later this year on which whistleblowers can report food safety issues. Last week, Chinese police arrested six staff members of McDonald's supplier OSI Group Inc following allegations in July that workers at its Shanghai Husi plant had used expired meat and doctored food production dates.

McDonald's has suspended supplies from all Husi plants in China and is reviewing its relationship with parent OSI pending an investigation by Chinese regulators. The OSI scandal dragged in KFC parent Yum, coffee chain Starbucks Corp and Burger King Worldwide Inc, among others. It also spread to Hong Kong and Japan.

China is McDonald's third-biggest market by number of outlets and the No 1 market for Yum Brands. McDonald's currently has over 2,000 restaurants in the Chinese mainland.

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