HK milk powder rules force price hikes

Online baby milk powder sellers told the Global Times Sunday that they planned to raise prices on milk powder smuggled from Hong Kong and restrict per-person sales, in response to a March curb on infant formula exports by the Hong Kong government.

Starting from March 1, 2013, "the export of powdered formula for infants and children under 36 months, including milk powder and soya milk powder" will be prohibited without a license and individuals aged 16 or older will be allowed to pass through customs with only two cans of 0.9 kilograms each, according to Hong Kong's Information Service Department Friday.

A Shenzhen-based milk powder seller surnamed He told the Global Times Sunday that the infant formula she purchases from Hong Kong via parallel traders will be priced higher by 10 yuan ($1.60) to 30 yuan per can, since the average payment for a parallel trader is expected to rise by some 20 yuan per can. He, who sold 428 0.9-kilogram cans over the past 30 days on leading domestic B2C e-commerce platform taobao.com, predicted insufficient supplies and restrictions on how many cans each customer may purchase.

A trader can currently take three or four 0.9-kilogram cans per trip from Hong Kong to the mainland, so smuggling costs will increase when the number drops to two in March, Wang Dingmian, director of the Guangzhou Dairy Industry Association, told the Global Times Sunday, adding that this is a major way for the mainland's online sellers to get milk powder from Hong Kong.

The regulations are not good news for online sellers, but will control smuggling to some extent and benefit the development of legal importers, as milk powder smuggled from Hong Kong is now expected to cost as much as legal imports, a Guangzhou-based industry insider importing dairy products for more than 10 years told the Global Times Sunday on condition of anonymity.

Hong Kong has experienced infant formula shortages several times since 2011, which were largely caused by purchases from mainland visitors and smugglers, Wang said, but expected the impending curbs to have little influence on the mainland milk powder industry given the large market size.