Foreign Baby Formula, Prices Keep Going Up
    2012-07-09 10:00:27     CRIENGLISH.com         Web Editor: Mao Yaqing

The price of foreign milk powder brands have increased recently here in China.
 
The prices for the imports are several times higher than domestic brands.

Canned milk powder prices now exceed 400 yuan.
 
But does a high price necessarily mean high quality?

Zhang Wan finds out.

 

Using a German organic powdered milk product as an example, its listed online price is only 9.95 euros, about 80 yuan. But, that is only a quarter of its retail price in China.

Many milk powder consumers complain that the milk powder produced in Australia and New Zealand is three times more expensive in China than in their own countries.

Many parents say they have no choice. Ms. Zheng is one of them.

"Well, I think we need to pay at least 2,000 yuan a month for my baby's milk powder. Most of our family income is spent on my baby, and milk powder costs a lot every month."

As for the reason behind the price hikes, many foreign brands say it is because of higher costs and product upgrades. However, Zhao Ping, the department head of the Chinese Academy of International Trade and Economic Cooperation, disagrees.

"Every time there is price increase for foreign milk powder, the reason is said to be higher costs. But, this isn't a rational explanation for frequent price increases, such as price hikes several times a year."

Experts say that the extra cost for the imported milk powder mainly comes from import duties, inspection fees, and warehouse costs, which account for 28 to 30 percent of the original price. That does't give excuse of three times hike on original prices.

So the real reason for the frequent price hikes, experts believe, is a foreign milk powder monopoly in the Chinese market.

"The monopoly doesn't mean that any particular foreign brand has very large market share, but several brands together take up more than 60 percent of the baby formula market in China."

Also, there is another reason for the price hikes. Chinese consumers believe that the high price correlates with high quality, especially when home brands repeatedly have quality problems.

A baby boom in the current Year of the Dragon in the Chinese zodiac has led to an increase in imported formula. It is a vast market for foreign brands.
Facing the rising prices for foreign milk powder, Zhao Ping says the only way out is to cultivate competitive domestic brands.

"The prices for foreign milk powder are decided by the companies, and the government can not restrict the price. Therefore, it's more important is to have competitive domestic brands and encourage domestic milk powder manufacturers to pay more attention to brands image and increasing the quality of their products. This will build a better image among domestic consumers."

The tons of milk powder entering China every day meet the needs of tens of millions of babies. Industry insiders say overseas products, especially those from New Zealand due to China's Zero Tariff policy on infant milk from that country since the beginning of this year, have posed a great challenge to China's domestic brands.

For CRI, I am Zhang Wan.

Share

                  


CRIENGLISH.com claims the copyright of all material and information produced originally by our staff.

CRIENGLISH.com holds neither liability nor responsibility for materials attributed to any other source. Such information is provided as reportage and dissemination of information but does not necessarily reflect the opinion of or endorsement by CRI.


 
Hourly News more

The Beijing Hour more
The Beijing Hour updated 20:00 2014/05/23
Micro-blog: weibo.com/beijinghour

Highlights more

People In The Know more
2014-01-20 20 Years of NAFTA and the Future of Free Trade
Twenty years on, how should we look back on NAFTA and its achievements?
2013-12-26 Big Data and Cloud Computing (2)
What role can big data play in the world of finance, and the regulation of that role?

Talk to CRI

News
China
World
Politics
Business
Sports
Showbiz
Sci-tech
Photo
Recommended
China
World
Sports
Showbiz
Travel
Video
C4
The Sound Stage
Showbiz
Travel
China Revealed
My Chinese Life
Travel
Destinations
Photo Gallery
Recommended
Learn Chinese
"In" Chinese
Chatting in Chinese
Pop Culture
Traditional Culture
Living Chinese
Chinese Studio
Chinese Class
Learn English
Special English
Pop Chart
Everyday English
Fabulous Snaps
CRI News
APEC Yiwu Conference  |  China-Eurasia Expo  |  eBeijing  |  China Job  |  China Tibet Online  |  China Daily  |  Global Times  |  Xinhua  |  China.org.cn  |  CNTV.cn