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TRADE WARS
China moves to deter firms from hiking prices

by Staff Writers
Shanghai (AFP) March 30, 2011
China has warned consumer goods makers such as Unilever to avoid hefty price rises after reports of planned hikes sparked panic-buying of soap by inflation-conscious shoppers, state media has said.

The China National Radio report underlined the government's fears over the potential for price rises to spur social unrest in China, which has seen inflation soar in recent months.

The government also plans to launch a probe into the rumoured plans, which earlier reports said could see the cost of some goods jump by up to 15 percent, the report said.

Worried shoppers around the country cleared store shelves of soap, detergent and other household items as they rushed to stock up amid fears future supplies would be more expensive.

"I saw the news about price hikes on television last week and bought one big package of washing powder," a 58-year-old Shanghai retiree who gave her surname as Zheng told AFP by telephone on Wednesday.

"There were not many packages left on the shelf when I went to the supermarket yesterday again to buy another one. The prices are going higher and we need to use them daily. So why not buy some now?" she said.

The National Development and Reform Commission, China's central economic planning agency, urged "relevant companies" to be "socially responsible" and not to seek to profit from inflation, the report said.

The NDRC, which regulates prices of key products such as fuel, is "highly concerned" about possible cost hikes, an unnamed official was quoted as saying by the radio station.

"The widespread online rumours about price increases have intensified people's worries about higher prices in the future," the official said.

The NDRC official identified Anglo-Dutch consumer products giant Unilever and Taiwan's Tingyi Holding Corp, producer of popular instant noodle and beverage brand Master Kong, as two of the companies considering rises.

Neither the agency nor the companies immediately replied to AFP requests for comment.

Reports have also cited Procter & Gamble as among the companies considering price hikes.

Unilever and P&G, along with China's Guangzhou Liby Enterprise Group Co and Nice Group, planned to raise detergent prices by five to 15 percent by the end of March, the official Xinhua news agency reported last week.

The report said the four firms accounted for more than 80 percent of China's detergent market, and the price hikes could prompt smaller rivals to follow suit.

The China National Radio report quoted the unnamed NDRC official as saying the agency planned to send teams to "look into the matter."

The agency published amended rules about pricing in December, saying it would "severely" crack down on collusion to increase prices, hoarding of goods and price-gouging.

It raised the maximum fine for retailers that collude to increase prices to five million yuan ($757,600), from one million yuan previously.

Beijing has implemented a number of measures including interest rate hikes as it tries to temper public concern over inflation, which remained stubbornly high at 4.9 percent last month -- above Beijing's 2011 target of four percent.



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