Fonterra latest to cut Chinese prices after price-fixing probe

By Fiona Barry

- Last updated on GMT

Picture credit: (Nerissa/flickr)
Picture credit: (Nerissa/flickr)

Related tags: Milk

Fonterra has slashed the cost of its Anmum maternal health products in China by 9%, making it the latest company to reduce its prices following the launch of a government investigation into suspected anti-trust law violations.

In a statement sent to DairyReporter.com, the New Zealand-based dairy exporter said that the decision to reduce the cost of its Anmum range in China will allow it “to better meet consumer needs in light of recent industry-wide price revisions.​”

We are committed to providing high quality, premium imported products to Chinese consumers and we are also committed to being an integral part of and long-term partner to the Chinese dairy industry,​” said Kelvin Wickham, president of Fonterra Greater China and India.

Fonterra’s price reduction will take effect on August 1.

Fonterra "contacted" 

The firm disclosed earlier this month that it had been "contacted"​ by the National Development and Reform Commission (NDRC) in regards to suspected anti-monopoly law violations, and stated that it was “co-operating fully with the NDRC.​”

It did not, however, confirm whether it was under investigation.

Infant formula manufacturers, Abbott Laboratories, Danone, FrieslandCampina, Mead Johnson, Meiji, Nestlé-owned Wyeth Nutrition, and China-based Biostime have also slashed the prices of their products in China since news of an investigation emerged in June.

Japanese dairy processor Meiji has announced it will lower the cost of its main formula products in China by 3-7%, and freeze prices for two years.

Demand for foreign-made infant formula has soared in China since 2008, when six children died and 300,000 became ill after consuming Chinese-produced formula milk tainted with melamine.

A “public relations exercise”?

The launch of an investigation has prompted speculation that the NDRC is attempting to flex its muscles as a regulator at a time when China is moving from a state-led to a more consumer-led economy.

"On a fundamental level, the NDRC is scrambling to show that it has something to contribute,​" Barry Naughton, professor of Chinese Economy at the University of California, San Diego told Reuters.com.

Forcing down expensive formula milk prices is consistent with China’s desire to move away from an export and investment-reliant economy, toward a greater dependence on consumption, said experts.   

"Every time price reductions are made, it's mainly a public relations exercise​," said Zhou Zhang, an analyst at China Merchant Securities, to Reuters.com. "The NDRC trumpets how big reductions will be, but when it comes down to it, prices only fall a bit. The NDRC's main consideration is public relations."

Related news

Show more

Follow us

Featured Events

View more

Products

View more

Webinars