From SCDigest's On-Target e-Magazine
- Aug. 6, 2014 -
Global Supply Chain News: Time to Start Minding Your P's (Prices) in China?
China Cracking Down on What It Sees as Higher Prices there than in Other Markets; Daimler Offices Raided Yesterday
SCDigest Editorial Staff
News this week that China is starting to crack down on what it sees as pricing anomalies by non-domestic firms operating in the country, perhaps surprisingly because they are actually charging higher prices within China than they are in their home markets for the same items.
The Wall Street Journal reported earlier this week that Chinese antitrust officials have launched probes of companies ranging from car makers Audi and Daimler to technology companies Microsoft and Qualcomm, but they haven't always disclosed what they are investigating.
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Chinese electronics manufacturers sometimes pay more for microprocessors inside China than do competitors in other countries, the Wall Street Journal notes.
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What Do You Say?
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And in breaking news, just yesterday Chinese officials raided Daimler's Shanghai offices, looking for evidence of overpricing by the company in China. Daimler says it is cooperating with Chinese authorities in the matter.
"Experts say China is responding to greater awareness that the prices its people and companies pay for goods from foreign companies are often higher than those in other markets," the Wall Street Journal notes.
For example, Chinese consumers pay about $470 for the least costly version of an iPad Mini with Retina display, while U.S. consumers can buy one for $399.
Replacement car parts are also often more expensive in China than they would be in other countries, but market experts says that that is in part because in China many car companies are able to insist insist the parts be sold only through authorized dealers, freezing out discount retailers, who might offer parts that are just 20% of the price through approved channels.
Others note that for some items, Import and luxury taxes in China also can drive prices up there.
The investigation is obviously very broad. Also just this week, there were reports that the Chinese authorities are stepping up scrutiny of the prices of medicines from western pharmaceutical groups, against a backdrop of growing evidence they are often charged substantially more than richer countries.
The scrutiny is being fueled in part because more and more Chinese are travelling, and often see prices for goods outside the country that are lower than they have been paying within China.
And it is not only Chinese consumers that are concerned. Chinese electronics manufacturers sometimes pay more for microprocessors inside China than do competitors in other countries, the Wall Street Journal notes.
Sources say the targets for Chinese regulators in many cases are foreign companies with a commanding presence in their markets and that lack direct or meaningful Chinese competitors.
(Global Supply Chain Article Continued Below)
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