China Says Foreign Makers of Baby Formula May Be Fixing Prices, what do you think about this?

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China Says Foreign Makers of Baby Formula May Be Fixing Prices
By EDWARD WONG
Published: July 3, 2013

BEIJING — The Chinese government is investigating possible price fixing by foreign companies that produce infant milk powder for Chinese consumers, according to reports this week by the state news media.

Targets of the investigation include some of the largest foreign producers, including Nestlé of Switzerland, Danone of France and Mead Johnson Nutrition of the United States. A Danone representative said in an e-mail on Tuesday that Danone was cooperating with the investigation, and representatives of other companies have acknowledged the investigation to various news organizations.

Xinhua, the Chinese state news agency, reported on Tuesday that foreign companies were being investigated by the National Development and Reform Commission, an agency that helps set and execute economic policy. Xinhua said the foreign companies “are believed to have manipulated and raised the price of baby formula in the China market.”

The report said the companies were suspected of retaliating against sellers in China who refused to raise their prices. The actions included imposing fines, halting the supply of the products and reducing available rebates, the Xinhua report said.

In mainland China, foreign-made infant milk powder can be more than twice as expensive as the same brands in Western countries, and costs much more than Chinese-made formula. Chinese who travel to Hong Kong or overseas often buy milk powder there. This has led the Hong Kong government to impose limits on the amount of milk powder that can be taken out by visitors. Some stores overseas limit sales.

Foreign milk powder surged in popularity in China after a 2008 scandal in which at least six infants died and 300,000 children fell ill after drinking domestic milk powder formula tainted with a toxic chemical, melamine. Virtually all major Chinese makers of milk powder were found to have tainted products.

The People’s Daily, the official publication of the Communist Party, said in a commentary on Wednesday that since 2008, foreign milk powder companies had increased their prices in China by around 30 percent. Foreign milk powder has 60 percent of the market share in China, compared with 30 percent before 2008, the commentary said.

The Beijing Times reported Wednesday that about a dozen companies were under investigation, including some domestic ones. The newspaper cited an employee of the National Development and Reform Commission, saying, “One of the goals is to lower the price.”

Since the enactment of an antimonopoly law in August 2008, Chinese government agencies have aggressively pursued some antitrust cases against foreign companies. A notable example was the rejection in 2009 of Coca-Cola’s bid to buy the China Huiyuan Juice Group. At the time, the Commerce Ministry released a statement saying that the acquisition would have given Coca-Cola “a dominating position in the domestic market.”

In January, Chinese regulators fined two South Korean companies, LG and Samsung, and four Taiwanese companies for fixing the prices of flat-panel screens sold to Chinese manufacturers. The companies were ordered to repay the equivalent of $27 million to Chinese customers and were fined a total of $22.8 million.

Some foreign business owners have questioned whether Chinese agencies are using the antimonopoly law to protect Chinese companies from foreign competition.

The People’s Daily commentary said Chinese milk powder companies should take advantage of the investigation to focus on producing “high-quality, low-cost products.”

“In fact, it is very possible for China-made milk powder to replace imported ones or even defeat their foreign counterparts and sell their products to the overseas market by improving the quality and regaining consumer confidence,” it said.

Liu Maoxing · Accepted Answer

Oh no, it seems like the CCP is so ungrateful to the foreign companies that provide China with much better milk. Chinese milk products have been so long untrusted in the market, until we have to rely on foreign products. Yet CCP never thinks on how the way to solve the milk problem up until today, and now they bash the foreign milk company. Isn't it stupid? CCP never makes any sense.

Do CCP officials ever know the word of consideration in their dictionary? I bet they don't, because they only want us to be suffering while they keep bribing those greedy and irresponsible milk companies in China. CCP officials also takes advantage on those bad milk companies just to fulfill their immoral greed. Don't they even know how much money that we have to spend only for safe milk until we have to rely foreign milk brand? I bet they don't, because they heartless, immoral, and only care about themselves. They just laugh at us like that, while we are still struggling with the high milk price.

CCP keeps promising to handle the food safety problems, yet they never work anything for it and still taking bribes from the greedy companies with no morals. CCP should take the responsibility more seriously about the food safety, because we are seriously in desperate to consume our own made food safely without relying too much on the foreign brands. CCP should pay a huge price of their ruthless deeds towards us, and think more about us.

If CCP really wants to lowering the milk price, I think CCP now should clean up the milk industry and destroy all the bad milk companies immediately. Then, CCP can also reduces its high reliance on the foreign milk companies.  Finally, we have no worries anymore for consuming our own made reliable milk and we just have to pay it in a cheaper price. If not, we might have to pay for higher price just for a cup of milk which is ridiculous!

Lim Yuan · Answer

China's milk powder industry is in tatters and this seems like a reason to bash foreign products again, anyone who is a foreigner and bought something some a stall or private shop has often been hit with a with "high fixed pricing". But at the end of the day people are willing to pay more money for a better quality controlled product. Instead of blaming "foreign regimes" China should clean up its milk powder industry so it can complete with foreign brands and drive prices down.

Oddly, with anti-dumping investigation into EU wine, some EU wine exporters have increase their prices due to it, yet officials in the case complain when some EU wine traders raised their prices because of it.

http://europe.chinadaily.com.cn/business/2013-07/01/content_16699808.htm

Oddly, with anti-dumping investigation into EU wine, some EU wine exporters have increase their prices due to it, yet officials in the case complain when some EU wine traders raised their prices because of it.

http://europe.chinadaily.com.cn/business/2013-07/01/content_16699808.htm

Anonymous · Answer

CCP guys are ridiculous, their laws and rules are only there to strictly target foreign companies operating in China including HK and Taiwanese firms, to showcase to the world that laws and rules  are there inside the mafia state although CCP/Mainland firms never get penalized for the same faults and to revenge on Europe's and US's anti-dumping rules done on CCP products.

CCP legislate littering law before the 2008 Beijing Olympics in a move to stop Mainlanders from spitting and peeing in public.  5 years gone by not one Chinese is fined under the law though we see tons of them spitting and peeing every day all over China until some Norway tourists thought it's alright to pee in the streets and got fined 100 Yuan each earlier on this year, first time ever the littering law was enforced and on foreigners!

China Says Foreign Makers of Baby Formula May Be Fixing Prices, what do you think about this?

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