Experts have questioned a reported move by four leading consumer product suppliers in China to raise prices of household products, urging the government to look into the matter.
In reports this month, unidentified sources said that the four leading suppliers -- Procter & Gamble, Unilever, Liby, and Nice Group -- will raise product prices by 5 to 15 percent starting next month. The four companies command four-fifths of China's consumer product market share.
Vice president of Unilever Greater China Zeng Xiwen confirmed with Xinhua that several companies would raise prices, but declined to name them.
According to industry analysts, spreading news of a price increase before they actually rise can lead to a sharp increase in sales. The news can also serve to test public reaction to a potential price raise.
Rush buying of personal care products has been reported in several Chinese cities since the news was released. Soap, shampoo and body lotion sold out in several supermarkets in the city of Nanjing in east China's Jiangsu Province.
Qiu Baochang, a lawyer with the China Consumers' Association, said,"Releasing news of a price raise before actually raising prices undermines the interest of consumers by disrupting the normal market order and the price setting mechanism."
He noted that a provision in China's Price Law specifically forbids price fixing by way of fabricating news of a potential price rise.
Liu Junhai, a law professor with Renmin University, said a price increase by these companies could be seen as price-fixing if they command more than 50 percent of the market and their price raises are done in collusion with each other.
Companies are free to set their own prices, but this freedom must not be abused, he said, adding that announcing a price rise before an actual increase does not legitimize the increase.
Despite accusations of price-fixing, Zeng reportedly said that the price increase was caused by increasing oil prices, the main raw material used for producing household products.
According to Zeng, prices for vegetable oil and other production materials have grown by about 50 percent, and oil prices have doubled.
China has weathered other collective price increases in consumer products in the past. In recent years, producers of milk powder and instant noodles increased their prices almost simultaneously, also citing higher raw material prices as the reason for the increases.
Li Youhuan, an economist with the Guangdong Academy of Social Sciences, said that the government faces a regulation challenge to prevent price-fixing in a consumer product market where producers are free to set their own prices.
Related government agencies should take the collective price increases seriously and launch an investigation as soon as possible to staunch any possible illegal activity, he said.
