I’m shocked, shocked. China says foreign makers of infant formulas are fixing prices (did you ever wonder why the prices of different brands of formula or baby food were all the same?).
Foreign milk powder surged in popularity in China after a 2008 scandal in which at least six infants died and 300,000 children fell ill after drinking domestic milk powder formula tainted with a toxic chemical, melamine. Virtually all major Chinese makers of milk powder were found to have tainted products..
Chinese newspapers say that since 2008, foreign milk powder companies have increased prices by around 30%. Since 2008, the market share held by foreign milk powder has doubled from 30% to 60%.
In response, two makers of infant formulas, Nestlé (no relation) and Danone, have promised to cut prices. In the meantime, Chinese authorities are investigating price setting policies.
Some analysts see the inquiry as possibly part of a broader Chinese plan to increase consumption of local infant-milk products….Foreign brands may also soon have to rely on their Chinese partners if they want greater access to the Chinese market. The Chinese government has expressed an interest in bringing the supply chain under the control of Chinese firms as part of its goal of reducing the number of local infant formula producers to 10 from more than 200 within two years.
I’ve been writing about Chinese infant formula issues for years.