英闻天下——141 Moutai Investigated for Price Monopoly

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　　Moutai's chairman Yuan Renguo said at the end of 2012 that the key task for Moutai is to prevent the retail¹ market prices from decreasing.

 

　　Lawyer Han Liang says according to the China Anti-monopoly Law, a company is forbidden to set fixed² or base prices for distributors. This is a price monopoly.

 

　　"Companies are not allowed to set minimum retail prices for distributors, this is what we call vertical³ price monopoly. It may mean that consumers have to pay higher prices for the product."

 

　　Media reports Moutai has punished three distributors for breaking the company's price discipline to sell Moutai liquors at lower prices. However, lawyer Han Liang says the punishment has broken the China Anti-monopoly Law. When being asked about the possible punishment, Han Liang says:

 

　　"One possible penalty that Moutai company will face is a fine. As for how much the fine will be, it's decided⁴ by the National Development and Reform Commission based on the current anti-monopoly law, it's probably 1 to 10 percent of the total sales revenue, so this is very harsh punishment."

 

　　Once Moutai changes its marketing⁵ polices, distributors will have certain autonomy in deciding the retail prices of Moutai. As the coming Spring Festival is traditionally a liquor consumption boom time, many distributors will prefer to clear inventories⁶ rapidly with low prices, something which is believed to affect the prices of high-end liquors to some degree.

 

　　An industrial insider Zhao Jun says a high price does not necessarily mean high quality.

 

　　"The overpriced liquor is actually kind of bubble. When the bubble is broken, a high quality product should be priced more reasonably."

 

　　Some people believe that tightening⁷ entertainment expenses of governmental and public departments will affect the sales of high-end liquor in the New Year season.

 

　　In addition, people are becoming more rational when selecting liquor. Media report says Moutai has fallen out of the top 10 preferred brands used as business or personal gifts by China's millionaires, but it was still the only Chinese brand to make it into the top 15.

 

　　The Hurun Report's Chinese Luxury Consumer Survey 2013, released recently, shows the Chinese liquor brand dropped from 5th place last year to 13th in the list of preferred gift brands.

 

　　For CRI, I am Zhang Wan⁸.

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