(Henri Nestlé in Chinese Marketing)

Background:

On July 2nd, National Development and Reform Commission (NDRC) held the meeting on the price of Infant Formulas marketing to find the solution for the sanction of five import infant formulas; some enterprises were invited to join. According to the information from insider, the National Development and Reform Commission (NDRC) started the anti-monopoly for five foreign infant formulas brands, because of their frequently increasing price and unrealistically high price.

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Someone from infant Formulas enterprises said, Chinese government will invest 10 billion RMB for dairy sources establishment, industry configuration, quality surveillance and etc. This amount will be distributed to different departments for rectification and support for the industry.

Net friends' comments from China Economic Net

1.Why do Foreign Infant Formulas domineer in China?

The reason that foreign infant Formulas enterprises dare to increase price together, is that Chinese government losing position on supervision. The Unrealistically high price of foreign infant Formulas brands is not the phenomenon appears recently, but the phenomenon has existed for 4-5 years. In main degree, the supervision department was in the condition of losing position. Now it seems "mend the fold after the sheep have been stolen" to rectify these foreign Formulas enterprises and it is meaningless even we punish them for several hundred million.

According to the game rule of Marketing, in the procession of contending for markets, each competitor will use the method of increasing the quality and decreasing price to gain consumers. The Foreign infant Formulas and domestic infant Formulas are totally different products on quality. So as to the Foreign infant Formulas can increase price freely, and the domestic infant Formulas even decrease to the bottom price there is still no one buys.

In current safety situation of infant Formulas, the foreign brands have gain Chinese consumers successfully.

2.Whose should take responsibility for the monopoly of foreign infant Formulas Enterprises?

The problems of domestic infant Formulas expose in the media frequently, which constantly hits the bottom line of consumers' heart, and it compels the consumers to buy Foreign infant Formulas, and Foreign infant Formulas enterprises use this chance to nibble up the market share of China's dairy market, and increase the price to gain more profit year by year. 

In order to regain marketing from Foreign infant Formulas enterprises, the quality of infant Formulas must be increased first and provide high quality and safety domestic infant Formulas for customers; and then, Dairy Association should make high standards for subsidiaries, and the standards need to meet the standard of European and American standard, and urge the subsidiaries to obey the standard, thus will recover the confidence of domestic consumers step by step. Finally, the supervision departments should severely punish those enterprises that violate the law and discipline.

3.Can 10 billion RMB bring the safety of China Dairy?

The government will invest 10 billion into Dairy industry, will it bring the safety of China Dairy? There is a long way to reach the goal of domestic Dairy safety. How will the 10 billion be divided to different departments and commissions for rectification and support for the industry? How much will be used for dairy sources establishment, industry configuration, quality surveillance? How many enterprises will get the support and use the amount properly? It needs to be considered seriously and manage this 10 billion properly.

By rights, 10 billion RMB can be used to do a lot of things. If it can be used for dairy sources establishment, industry configuration, quality surveillance and etc seriously, the safety of domestic dairy can't be the problem. Back to the reality, will 10 billion RMB bring the safety of China Dairy? We will wait and see.