More baby formula firms annouce plan for price cuts

More foreign dairy firms have announced plans to cut their baby formula prices in China. It comes after Chinese authorities launched investigations over alleged price-fixing of a handful of manufacturers.

Despite the promised price cuts, customers remain cautious about what to add to their shopping lists. CRI's Zhang Shuangfeng has more.

US based Abbott Laboratories have announced plans to cut prices of their infant-formula brands by between 4-percent and 12-percent.

The announcement comes after Nestle, Danone and Friso released statements saying they would cut the prices of their baby formula.

China's National Development and Reform Commission started an investigation last week for possible price fixing among international formula makers.

So far, only MeadJohnson Nutrition has not issued any price cuts.

Ms Fu is a public relations officer at the company.

"The investigation is ongoing, and we have submitted related information to the National Development and Reform Commission. We will cooperate with the probe. And since we are a listed company, I can't comment on whether the company will lower the price in the future. So far, we haven't received any notice to adjust our product prices."

Despite the promise of lower prices, customers remain cautious about whether they really can pay less for what they need.

"I read it in the newspaper that there will be a price cut. So I come here to check out. But I don't find the formula I need any cheaper."

"I heard the news, but I haven't checked out the price yet. Sometimes I bought the formula via online shops, it could be cheaper. My boy is now drinking Friso products, and a 900g formula costs about 199 yuan. I hope there will be at least 20-yuan's cut."

Chinese demand for foreign milk formula has risen over the year, with foreign companies accounting for half of the top 10-sellers.

It is reported the gross margin of some high-end formula can exceed 60-percent.

Song Liang is a dairy industry researcher with the Distribution Productivity Promotion Center of China Commerce.

"In the domestic market, consumers tend to believe that the more expensive the formula is, the safer it will be. It is a lucrative industry. There are a huge number of players out there and the competition is fierce. As a result, big firms have invested a large sum in product promotions. But the increase in costs does not justify the companies' practices of overpricing. And the current investigation will serve as a warning for the big players."

However, Song says that the price drop will only be temporary, as there is a huge demand among consumers who take food safety as their priority.

Song is not alone in believing so.

"I haven't heard about the price cut. I bought all the baby formula directly from overseas. Yes, I didn't buy any formula from supermarkets here, because of the concerns for food safety."

Back in 2008, melamine, a type of industrial chemical was detected in domestically produced milk powder, hampering consumer's confidence in domestic products.