China has highest prices for foreign milk powder

The Chinese mainland has the highest sales price for foreign-branded milk powder among all other countries around world, website Newspaper.jfdaily.com reports on Thursday.

As reported, foreign-branded milk powder manufacturers have frequently increased the prices of their products in recent years, from 200 yuan per box several years ago to today's price of 300 yuan each. Some high-end milk products boast a 400 yuan price tag per box. However, on average these products sell for 20 Euro (165 yuan) each on foreign supermarket shelves.

Despite their high price-tag, foreign-branded milk powders are still winning the hearts of most parents in China, and some buying agents have even rushed abroad to purchase them to sell at home.

Since 2008, the year that melamine-contaminated milk powder was first detected in the Chinese Sanlu Company, foreign-branded milk powders have adjusted their prices together on four different occasions, each time raising the sales price by ten percent. The expensive brands include MeadJohnson, Abbott, Dumex, Nestle, Wyeth, Meiji and Maysu. Some have increased their prices by up to 50%.

So, what is the difference between the mainland brands and the foreign ones?

Wang Dingmian, a senior specialist within China's dairy industry says, "High price and high profit are the two marketing philosophies for foreign milk powder manufacturers".

Wang believes that foreign manufacturers had a high-priced market position for China from the very start, even prior to the 2008 milk scandal. Foreign manufacturers continually strive for high profits.

An anonymous insider has said that for both Chinese and foreign manufacturers, the price of the raw materials used to create milk powders are almost the same. Even after adding fares and tariffs, the gross profit rate of the products from abroad can reach 80% to 100% margins compared to similar figures from Chinese manufacturers.

According to the report, foreign-branded milk powders occupy a 65 percent market share on the Chinese mainland, and its occupation in advanced market reaches nearly 90 percent.