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P&G to raise prices

By Yu Tianyu and Zhou Yan (China Daily)
Updated: 2008-07-10 11:11

Procter & Gamble, the maker of Tide laundry detergent and Pantene shampoo, is likely to raise prices in China, said Zhang Qunxiang, spokesman for P&G China.

But the specific time, products and mark-ups are still being worked out, said Zhang, adding the company will keep a close watch on changes in prices of oil, petroleum derivatives and domestic materials, and adjust product prices accordingly.

This echoed the company's announcement to boost global prices by up to 16 percent owing to higher costs for plastic, energy and paper. The increases are the US-based company's steepest in at least 18 months.

Retailers will pay P&G 2 to 16 percent more for fabric, home and hair care, bar soaps, and health and shaving products from September, P&G spokesman Paul Fox said.

P&G has already raised prices by 4 to 8 percent in the past 18 months.

The company tried to counter a third of rising expenses for pulp, used in paper, tallow, an animal fat used in soap, and oil-based products such as plastics through the reduction of distribution costs, Fox said.

So far, some supermarkets and convenient stores in Beijing, such as Shouhang and Dia stores, haven't adjusted prices of P&G products. But China Wal-Mart sources said their purchase department has seen price increases in hair care products.

"Profit from household and personal care products in China is low and costs have increased 40 to 50 percent," said Yu Xueling, secretary-general of Guangdong Chamber of Daily Used Chemicals.

A price increase will affect small and medium-sized enterprises the most, forcing some out of the market, she said.

Some Chinese household and personal care enterprises, including Liby, Whitecat and Jahwa, are reluctant to say if they will also raise prices. But Xu Xiaodong, spokesman for Liby, had earlier said the company has logistical advantages over P&G as it has built eight manufacturing bases across China.