Having low confidence in domestic baby formula brands, Chinese consumers have turned to imported formula but are finding a growing number of problems with those products, too. (Source: China Daily File Photo)
By Xinhua writer Wu Liming
BEIJING, Aug. 8 (Xinhua) -- China on Wednesday announced it has sent fine bills of 108 million U.S. dollars to six mostly foreign infant formula producers for price-fixing.
They were the largest fines ever imposed for anti-trust infringements since China adopted anti-monopoly law in 2008.
The fine bills were not discriminative against foreign firms as hinted by some Western media. However, the case demonstrated that there are less and less loopholes for transnational companies to earn "easy money" in China.
Statistics has proven that China treats foreign companies and their domestic counterparts as equals in anti-trust probes.
Since the implementation of anti-trust law in 2008, the Ministry of Commerce have received over 700 complaints and it has investigated 690 cases.
Among those cases, a majority of them involved domestic companies and very few foreign firms have been targeted.
Apart from the current case, earlier this year, Samsung, LG and four Taiwanese markers of LCD display screens were ordered to pay a fine totalling 353 million yuan (around 58 million U.S. dollars) for price-fixing.
By comparison, the country's alcohol makers Kweichou Moutai Co., Ltd. and Wuliangye Yibin Co., Ltd. were ordered to pay a heavy price of 449 million yuan (about 73 million U.S. dollars) for their involvement in price manipulation.
What's more, the latest anti-trust decision does not aim at boosting domestic brands as some foreign media speculated. Instead, it might help increase market share of international formula giants thanks to the ensuing price cuts.
The question is, what lesson could international companies draw from the punishment?
Chinese market is becoming more and more regulated and international firms should obey local laws and regulations. They should give up old mentality of making use of "loopholes" to earn "easy money".
Since China's entry into the World Trade Organization (WTO), China has enacted and amended a series of laws to make them in line with the WTO norms and international practice, so as to boost lawful, orderly and robust market competition.
In the meantime, China has enhanced law enforcement in a bid to create a clean business climate for both domestic and international firms, especially since this year.
What's more, China has tightened its efforts to fight corruption and malpractices in business and commercial operations.
Last month, Chinese authorities launched a probe into international pharma giant GSK for its suspected bribery and tax-related violations.
All in all, a clean, orderly and robust market with less and less "loopholes" is good for both domestic and international companies.
It is desirable for foreign firms to incorporate international practice into their Chinese business, and renounce old practice of seeking "loopholes" in the Chinese market.
Remember, there will be no "China exception" any more.
China issues record anti-trust fines for formula firms
BEIJING, Aug. 7 (Xinhua) -- Chinese authorities have issued fines totaling 670 million yuan (108 million U.S. dollars) for six baby formula companies operating on the mainland following an anti-trust probe, the country's top economic planner announced Wednesday.
The six companies are Biostime, Mead Johnson, Dumex, Abbott, Friesland and Fonterra, the National Development and Reform Commission (NDRC) said. Full story
China consults on tighter infant formula regulations
BEIJING, Aug. 6 (Xinhua) -- China on Tuesday published a draft regulation on infant formula production to seek public opinions, which will raise standards in the sector in an all-round way, said the State Food and Drug Administration. Full story
News Analysis: Baby formula price probe to shakes or reshapes industry?
BEIJING, July 4 (Xinhua) -- A probe into possible price fixing by foreign and domestic baby formula firms will lead to the consolidation of the dairy sector, experts have said.
The National Development and Reform Commission (NDRC) is investigating foreign baby formula companies, including Nestle, Mead Johnson and Wyeth, as well as domestic company Biostime, over alleged anti-trust violations. Full story
China launches anti-trust probe into baby formula
BEIJING, July 2 (Xinhua) -- China's top economic planner is conducting an anti-trust probe into several baby formula companies to investigate allegations of price fixing, the Shanghai Securities Journal reported Tuesday. Full story
Baby formula industry to consolidate
BEIJING, June 19 (Xinhuanet) -- About a third of the country's baby formula businesses will be axed, in what experts are calling a major consolidation of the industry.
The government has been trying to revive the industry since the 2008 melamine scandal, but consumer confidence is still lacking. Full story