Photo: gruntzooki on flickr
Chinese consumers are getting killed by food inflation, which peaked at 62% year-over-year in November. However, things would be worse if the government wasn’t putting artificial limits on prices.Beijing officials announced earlier this winter they would hand out fines to speculators accused of driving up prices. They also said they would consider direct price controls. Companies like Rio Tinto have faced criminal charges when prices got too high.
Now look at the overpricing scandal that ensnared retailers Carrefour and Walmart in the past month.
Both companies have been accused of fraudulent pricing practices, such as advertising a normal price as a sale price and billing items at higher than the advertised price. Both companies have humbly apologized to customers and paid fines to the government.
Why is this scandal happening right now? Either the retail franchises are struggling to remain profitable in the face of price controls. Or this scandal was created by the government to pass the blame on rising prices.
Of course, Carrefour, Walmart and Rio Tinto aren’t complaining. This is the cost of doing business in China.
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