China yesterday said it has fined six mostly foreign baby formula producers, including New Zealand’s scandal-hit Fonterra, a total of US$108 million for price-fixing, as it seeks to cool public anger over the sector.
The penalties — also levied against firms from the US, France, the Netherlands and one Chinese company — came after a five-month inquiry by the National Development and Reform Commission (NDRC), China’s top economic planner.
They were a “record high” in Chinese anti-monopoly rulings, Xinhua news agency said.
They also come in the middle of the latest safety scare over formula, in which Fonterra has had to recall in several countries products tainted with a bacteria that can cause botulism, a potentially fatal disease.
It said yesterday that all the affected items had been removed from retailers’ shelves.
China is the world’s biggest market for formula and foreign-branded products are in high demand after repeated safety scandals involving domestic products — including one in 2008 when six children died and 300,000 were sickened.
Prices are high as a result, leading to frustrations among consumers.
The commission said in a statement it fined Mead Johnson and Abbott from the US; Dumex, a subsidiary of France’s Danone; a China arm of Royal FrieslandCampina of the Netherlands; Fonterra; and China’s Biostime (合生元).
The firms set minimum prices with distributors and punished dealers who did not comply, the commission said, and their actions reduced competition and “unjustifiably maintained high milk powder prices.”
“They undermined the fair market competition order and harmed consumers’ interests,” it added.
Mead Johnson said it had been fined 204 million yuan (US$33 million), adding it remains committed to the country that is “one of the company’s most important markets.”
Biostime, based in Guangzhou, said in a filing to the Hong Kong stock exchange that it would pay a fine of 163 million yuan “in a timely manner.”
The value is about 6 percent of the company’s sales revenue in the previous year — the highest rate among all firms punished — because its violations were “grave” and it “failed to rectify its wrongdoings in an active way,” the commission said.
Fonterra said it was fined 4.5 million yuan and accepted the decision.
Its chief executive, Theo Spierings, said all tainted products, which were distributed in countries ranging from New Zealand to Saudi Arabia, had been removed.
“All the stocks have been contained, everything is out of the market,” he told reporters in Auckland. “It’s in warehouses and there is little or no more risk for consumers.”
The commission said Dumex was fined 172 million yuan, Abbott 77 million yuan and FrieslandCampina 48 million yuan.
Chinese authorities are also investigating 60 foreign and domestic pharmaceutical firms over how they set prices. In a high-profile case last month they arrested four executives from British drug firm GlaxoSmithKline for alleged bribery and other offenses.
Shaun Rein, the managing director of China Market Research Group in Shanghai, said authorities were right to bring down prices of vital goods such as baby formula and medicine.
“Prices on both have been spiraling out of control over the last 10 years,” he said.
Beijing tended to target foreign firms because “it scares everybody else into line,” but avoided antagonizing powerful domestic players. However, Rein said firms may have inflated baby formula prices partly as a marketing ploy to signal to consumers that they represented the quality and safety they sought.
The commission launched the dairy products investigation in March, mostly targeting overseas firms, and several of them announced price cuts last month.
Three companies — Wyeth, which is owned by Swiss giant Nestle, Japan’s Meiji and Chinese firm Beingmate (貝因美) — had been exempted from punishment, the commission said.
They provided important evidence and carried out active self-rectification, it added.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts