CUHK Marketing Department Survey on Hong Kong’s Retailing IndustryReveals that Unfair Practices Generally Exist in Supplier / Retailer Relationship
In recent years, the topic of whether Hong Kong needs a competition law has aroused much concern and discussions among the Government, the business community as well as the general public. As a matter of fact, there are always queries if anticompetitive practices such as monopoly and abuse of market position did exist in industries which have great impact on our daily living including the Retailing Industry.
In order to have a more in-depth understanding on the current situation of Hong Kong's Retailing Industry, Prof. Ho Suk-ching and Prof. Sin Yat-ming of The Marketing Department at the Chinese University of Hong Kong has conducted a survey with 121 local retail suppliers in December 2006. The study focused on the interplay between suppliers and retailers. Products of the responding suppliers include food/beverages, cosmetics/personal care, pharmaceutical/health, food, household products, rice/oils, dried sea foods, etc. Their major retailers are supermarkets, drug stores/personal care retailers, beauty/cosmetics retailers, etc.
Responding suppliers were requested to fill in a questionnaire which covered several aspects of operational practices such as price setting, incentive rebate, responsibility of damaged goods, share of promotion fee, etc, basing on their experience in the past 7 years. A number of these practices touch on the competitive behavior of suppliers and retailers. Focus of the analysis is on the interplay of power and conflict between suppliers and retailers, and whether there are any unfair practices existing in the process.
Survey results reveal that some possible unfair practices and behavior including stipulating prices charged by suppliers/retailers, restricting suppliers to supply goods/sales services to other retailers, requiring exclusivity from suppliers and restricting retailers to sell other suppliers' goods, etc. did exist in the retailing industry in varying degrees. However, since there is neither a sector specific (retailing) nor a cross-sector competition law in Hong Kong to define what constitute anticompetitive business practices, it is impossible to conclude that the behavior of retailers/suppliers were anticompetitive. Therefore, when industry players are in face of any situation that they consider as unfair, there are no laid down procedures for further investigation and complaints. While we are well aware that the government is actively studying if Hong Kong needs a cross-sector competition law, we believe results from this survey will be a valuable reference for the relevant departments.