Case Study: Price gouging by Carrefour in China
Carrefour is a French based retail global retail giant just after Wal-Mart which has over 12,500 stores worldwide that are either company operated or franchisee (). Carrefour has its presence in 3 major markets Europe, Latin America and Asia. Carrefour China is one of Carrefour’s biggest revenue earning areas.
The Chinese government provided preferential policies to foreign companies operating in China; lack of domestic competitors and with a brand name, Carrefour majorly controlled the retail sector across China. The report assesses what were the factors that led Carrefour to follow malpractices in pricing and what could be done to avoid such practises.
Carrefour China a major international retail unit in china came under the scanner for price manipulation in the early months of 2011. Carrefour was involved in the scandal for exaggerated claims to offer discounts, price bluffing, unrealistic promotion and double pricing. 12 retail units across china were charged. A product whose original price was 38 Yuan was hiked to 49 Yuan by the cashier, such were the practises carried out at Carrefour units.
National Development and Reform Commission (NDRC) confirmed the news of price manipulation carried out in these stores and were fined 500,000 Yuan each (US $ 76,000). Wal-Mart was also involved in this scam, and was found guilty ().