Beijing slammed Chinese instant noodle makers yesterday as being partly to blame for a surge in inflation, saying they illegally colluded to boost prices by up to 40 percent in a scheme that prompted a public outcry.
The report came amid a nationwide probe into whether alleged price-fixing or hoarding by producers is to blame for a 15.4 percent jump in food prices last month over the year-earlier period. The government accused violators of damaging social stability.
Investigators found managers of China's major noodle companies met three times since December to illegally set prices, the Cabinet's National Development and Reform Commission (NDRC) announced.
Their collusion "seriously disturbed market price order, harmed normal competition among managers and injured consumers' legal rights," the agency said on its Web site.
The NDRC cited no individual companies or managers and gave no indication of what penalties they might face or when results from probes of other food producers might be released.
Chinese law allows for companies to be fined up to five times the illegal income from price-fixing and possible confiscation of business licenses in serious cases.
Instant noodles are a staple of the Chinese diet and the price hike prompted public complaints on Internet bulletin boards and appeals for a government investigation.
An official of China's branch of the International Ramen Manufacturers Association, quoted by the official Xinhua news agency, said the price hikes were a response to soaring raw material costs.
The price of palm oil, which accounts for 18 percent of the cost of noodles, has more than doubled to 8,200 yuan (US$1,100) over the past year, the official, Meng Hesu, said. He said profit margins have been cut to just 1 percent to 2 percent.
"If we don't lift the prices, there will be no profit," Meng was quoted as saying.
Among other food items, pork prices have risen fastest, jumping by 86 percent last month over the same month last year. Authorities have blamed the rise on a shortage of pork caused by farmers' reluctance to raise pigs when prices were low earlier.
The cost of eggs was up 30.6 percent last month and that of edible oil up 30.1 percent, according to government figures.
Food processors have been squeezed by price competition in China's grocery industry, which has blocked them from passing on rising raw materials costs.
The NDRC said earlier its investigators also would look into why prices of grain, vegetable oil, pork, beef and poultry were rising so fast.
"Some industry groups have organized coordinated price rises," the agency said on an Aug. 3.
It said the collusion "influences social stability."
The International Ramen Manu-facturers Association is an industry organization based in Japan. The group includes ventures owned by Ajinomoto Co and Uni-President Enterprises Corp (統一企業), Asia's two largest processed food producers by sales, and Taiwan's Ting Hsin International Group (頂新集團).
"Prices of Uni-President's instant noodle products were raised by at least 10 percent since June across China after we got notification from Shanghai headquarters, and the notice only mentioned the increase was a result of rising costs," Qian Zheng, a company branch manager in Hunan Province, said by telephone.
Additional reporting from Bloomberg
Polytronics Technology Corp (聚鼎科技) yesterday announced that it is buying Henkel AG’s thermal clad dielectric material (TCLAD) business division for US$26 million as the Taiwanese firm aims to improve its technology, product portfolio and revenue performance. Polytronics, headquartered in the Hsinchu Science Park (新竹科學園區), is a supplier of protection components and heat dissipation materials. The firm entered the metallic heat-dissipation substrate market in 2007 and developed a unique solventless production process. Its board of directors approved signing an agreement with Henkel to acquire the German chemical firm’s TCLAD division in the US. The purchase includes all assets and business interests, including equipment,
ELECTRIC FARMLAND: TSMC’s proposal to clear 230 hectares of reforested land for what would become Taiwan’s largest photovoltaic solar farm has generated concerns New rules curbing solar farms built on agricultural land sparked fierce debate at a packed public hearing at the Legislative Yuan yesterday, with industry representatives saying that the new restrictions would endanger President Tsai Ing-wen’s (蔡英文) green energy goals, while agricultural officials emphasized the importance of protecting farmers and the environment. The Tsai administration has set a target to generate 20 percent of the nation’s power from renewable sources by 2025, by which time it also aims to install 20 gigawatts (GW) of solar power, including 6GW from rooftop solar systems and 14GW from ground-mounted solar farms. Although rooftop solar systems are
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday posted monthly revenue that suggested second-quarter sales surpassed analysts’ estimates, underscoring how its technological lead is helping the chipmaker weather the COVID-19 pandemic and US sanctions on its second-biggest customer Huawei Technologies Co (華為). Apple Inc’s main iPhone chipmaker posted sales of NT$120.88 billion (US$4.08 billion) for last month, up 40.8 percent year-on-year and bringing its revenue for the second quarter to NT$310.7 billion, beating the NT$308.8 billion analysts expected on average. TSMC, a barometer for the industry thanks to its heft in the global supply chain, had previously lowered its revenue outlook for this
‘SENSITIVE MARKETS’: The previously unannounced project would involve the company handing over control of data to a third party to sidestep privacy concerns Google has abandoned plans to offer a major new cloud service in China and other politically sensitive countries due in part to concerns over geopolitical tensions and the COVID-19 pandemic, two employees familiar with the matter said, revealing the challenges for US tech giants to secure business in those markets. In May, the search giant shut down the initiative, known as “Isolated Region” and which sought to address nations’ desires to control data within their borders, the employees said. The action was considered a “massive strategy shift,” said one of the employees, who added that Isolated Region had involved hundreds of employees