Fairness to be protected

Enquiries and probes are being conducted by the Chinese commerce authorities into a number of multinational corporations for their suspected attempts to manipulate prices and shortchange consumers in China.

These investigations are a necessary service, rather than disservice, to China's market. Complaints about price manipulation are concentrated usually in the high end of the market - where long-established international brands are allegedly charging much higher prices in China than in other countries without a good reason and due explanation.

One should not mistake the timing of the investigations as a sign that the government's nationalistic bias is growing. On the contrary, the anti-trust investigators are only acting in ways prescribed by the law. Legality and fairness render more effective protection for a healthy market.

Now increasing numbers of Chinese are traveling abroad, they often bring home not just better and cheaper products from their trips overseas, but also price comparisons that are sometimes sensationally more expensive in China. They feel hurt. And this hurt is easily shared on the Internet.

The view has emerged that Chinese are being treated as second-class consumers by the international brands. Before such a view evolves into more politically and nationalistically charged sentiments the authorities are duty-bound to act promptly so as to provide - and implement - a more solid legal framework for all companies' market practices.

It would be a mistake to assume that the anti-trust investigators are acting with a hidden agenda to help domestic brands gain a larger market share.

Most of the international brands dominate the high-end market in their own industries. They are globally competitive. And it is precisely because they have few worthy local competitors they can set by themselves the prices of their own products and services. The Chinese enquiries and probes are only aimed at finding out if they have broken the rules in setting higher prices in China than elsewhere.

Market domination is earned by superior quality, design, and services; and this should remain the case. It should not be used as a tool of exploitation, even in an environment of weak local competition.

If that happens, as has clearly happened in the recent case of the Shanghai-based Husi Food, a company entirely backed by US investment now under criminal investigation for having provided unsafe meat to many fast food chains in China, including McDonald's, the consequences hurt the international brands as well as the local consumers.

(China Daily 08/07/2014 page8)