Baby Milk Formula.

It's been going on for a while now, but I  thought that things had settled down; It appears that I was wrong. It was on the News again this morning about the tins of formula being purchased here in Oz and being sold in China for four times the amount. No wonder the Chinese folk are buying up a lot of our Country.

When our son was born in China, I made a connection online and ordered Nutrilon direct from Europe.  The price was still lower than buying Nutrilon in China, which I did not want to do considering the baby formula scares/scandals had been recent.

Some of the large stores have put a limit of two tins allowed to be purchased at one time. Naturally, many opportunistic people just came back a bit later and purchased more. They are now trying to work out ways to stop this from happening. The only way I can see is to take fingerprints!

This whole thing makes me wonder.  Hong Kong imposed a 2 tins per person export limit with huge penalties.  Five or so years back when their shelves were being picked clean, this made sense as an emergency measure.  What makes no sense to me is that the never bothered to change it.  Why not increase the imports to HK and raise the limit to 3 cans?  Then, once supplies are stabilized, repeat the procedure to raise the limit to 4, then 5, etc.  As imported supplies increase, those big markups in China will shrink to more reasonable levels.

Hopefully, the Australian stores will see this as an opportunity and increase their orders to their suppliers instead of complaining about any specific group of people buying too much.

I assume there are actual reasons the companies making these formulas don't recognise all this demand as an opportunity.  Partly it would be the extra requirements imposed on export products. And partly just the fact that exporting is a different business to producing for local consumption. But partly it would be a reaction to China as a market. Exporting to China specifically is a much more fraught business proposition than exporting to maybe anywhere else, especially for such easily counterfeited goods as powders. But I may just be wishing ill on China there. Maybe it really is all the producers fault.

I heard on the News last night that the two largest stores have taken the formula off the shelves and one has to request it. They say that it costs about $100 Australian to buy in China. EL, the Aussie stores are only concerned about the fact that the mums here are having trouble finding any for their babies. I heard that a lot is legally already being exported to China. What a sad situation all round.

It's possible some trade barriers on one end or the other may limit how much outside formula makes it into China.  On the other hand, I think the "please bring back as much milk power as possible" requests to anyone in China traveling overseas may also be linked to fear that some of the imports available inside of China are really domestically produced fakes.

I still think it's too bad HK hasn't taken the opportunity to increase their imports and relax their export restrictions.  That would improve the profits of their merchants and would help satisfy the demand.

I can understand Australian stores rationing as a temporary measure, but hope they are bright enough to get the concept of phasing in the supply to meet this increased demand.

Apparently, foreign brands already do dominate the China infant formula market. Something like one half to three quarters of all infant formula sold in China is already foreign. (And the cause everyone cites is the 2008 melamine scandal.) And for a while there, the foreign brands appeared to be guilty of price fixing...

Suppliers of Milk Powder to China Are Issued Fines

So,  it would seem the makers of infant formula have all along responded to all this extra demand.

But the daigou market still exists. That's actually interesting. What market is it addressing really? Is demand so very high in China that not even the price gouging legitimate sources can satisfy it? Or is the daigou model meeting some other need, because, say, it gives more apparent proof of genuine articles?

Someone should write a case study!

I'm just glad people have stopped bugging me to bring back 3 suitcases full of baby formula and 2 dozen iPhones every time I fly somewhere.

FWIW

Nielsen Report: Breaking Borders: Exploring the Daigou Opportunity (pdf)


Makes no mention of how these "logistics providers" are flirting with illegal export when they box up these goods and post them to China. Might or might not be an issue.

Calach, thanks for that information. Is  Daigou pronounced day go? I think that this explains what my Chinese mate does for a living. I have not seen him for about a month, probably because I have made it clear to him that I'm not interested in an intimate relationship. If I catch up with him again, I will be much wiser about what he probably does for a living. Our next conversation may tell me a lot more about this process in Oz.

More like "die" and "go", both with a falling sound

https://translate.google.com/#auto/en/%E4%BB%A3%E8%B4%AD

Click the little speaker symbol in the left-hand box

Thanks calach!

GM, if you happen to be in one of the shops with the 2 tin quota, can you ask them if they plan  to increase their rate of purchase so they can later raise the limit?

I'll try to remember to do that El!