China Mugs Foreign Companies With Price Investigations Fonterra Cooperative Group said Beijing’s National Development and Reform Commission was investigating its business activities. The statement by the New Zealand-based dairy suggested that Beijing’s probe of the pricing practices of the milk industry, announced by the NDRC on Tuesday, was broadening beyond makers of powdered infant formula. Fonterra is not in that business. Beijing has apparently launched a broad-based attack against foreign milk companies in China. Yet last week Chinese regulators revealed they will not be content with taking on just one industry. In the space of days they also went on the offensive against two other sectors dominated by multinationals. There should be no surprise why Beijing targeted milk first. Life was good for foreign businesses. In China, local producers charge 100 yuan for a 900-gram tin of milk powder while foreign ones go for 175 to 275 yuan. Since 2008, some foreign brands increased prices by 30%. Before that year, foreign companies controlled 30% of the Chinese market. Today, they have about a 60% share. In short, foreigners have been able to increase market share and prices over the last half decade.
Posted on: Fri, 26 Jul 2013 08:57:03 +0000
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