Markets

Uncertainty in the Market

Uncertainty in the Market

Fines imposed on foreign corporations for fixing prices, together with shadows cast on the safety of imports from New Zealand are disrupting the balance of the baby milk powder market in China. As part of the outcome of Beijing’s initiation of an anti-cartel investigation in the recent months, all market leaders from overseas including France’s Dumex (owned by Danone), the US’s Mead Johnson and Abbott Laboratories, the Netherlands’ Friesland Campina, and New Zealand’s Fonterra will have to pay fines totalling US$110 million.

The same goes for Hong Kong’s Biostime while others, such as Wyeth (controlled by Nestlè), and some Japanese and Chinese producers, avoided penalties simply due to their full collaboration during the probe.
The infant milk market in China is worth more than US$12 billion, and foreign brands account for about half of the total sales. After the fines, some of these firms are now faced with a possible reputation backlash. This is particularly true for Fonterra, which has also had its products taken off the shelves after charges of contamination and high levels of nitrites.