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Unilever fined for China price rise talk
Published on: 2011-05-09
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Beijing has fined Unilever, the Anglo-Dutch group, Rmb2m (£188,000) for talking about price rises even though they were not put into effect.

The move will heighten concern among consumer goods groups that they might be unable to pass rising costs on to China consumers.

The National Development and Reform Commission, China’s economic planning agency, criticised Unilever for allowing its spokesman to tell local media that detergent and soap prices might be raised because of high raw material prices.

Doing so caused panic buying, the NDRC said.

Unilever had “intensified inflationary expectations among consumers” and "seriously distorted market order”.

The harsh language reflects Beijing’s determination to manage inflation expectations and combat any threat to social order from high prices.

In March, China consumer prices rose faster than at any time in the past 32 months, up 5.4 per cent from a year earlier compared with a 4.9 per cent rise in February.

Sales surged up to 100 times above “normal levels” for some Unilever products after Zeng Xiwen, the company’s China spokesman, was quoted as saying that prices might go up, the NDRC said.

Unilever accepted the decision. “As a company with a long-term commitment to China, we continue to be sensitive to the local environment,” it said.

Unilever had earlier bowed to pressure from the NDRC, cancelling plans to implement the rises mentioned by its spokesman, but this was not enough to avert the fine.

"Severe punishment was meted out this time to break ugly habits and build new rules,” the NDRC said, and other groups should “absorb the lesson”.

Beijing has increased effective price controls on a range of companies.

The NDRC price department met more than a dozen industry associations last month, ordering them to press members to delay or cancel planned rises.

Other companies should “learn from Unilever’s case” and speak carefully to media, Dong Zhengwei, a competition lawyer with the Beijing Zhongyin Law Office, said.

"China is to celebrate the 90th anniversary of the Party this July, and central government will make stability the top priority.

"Anything that will cause instability will be very sensitive, making control of the market necessary.”

The government warned food and beverage maker Tingyi, with more than half the country’s instant noodle market, against “excessive” price increases on Friday.

 

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