The retailers were found to be manipulating the retail prices of gold jewellery products
Jewellers caught in price-fixing scam
Posted August 20, 2013 | By Emily Mobbs • Former Editor
A Chinese authority has imposed penalties on five jewellery businesses
in Shanghai, as well as a local trade association, for alleged
price-fixing practices.
According to China News Service, the National Development and Reform Commission (NDRC) fined the retailers 10.1 million yuan (A$1.8m) after investigations found they had manipulated the retail prices of gold jewellery products. The penalty is said to be equivalent to about 1 per cent of the five jewellers’ annual sales.
The Shanghai Gold & Jewelry Trade Association (GJTAS) was also reportedly fined 500,000 yuan (about A$88,800) for supporting the price-fixing.
"The gold jewellery markets in China are generally aligned with the international gold market, and domestic gold prices fluctuate along with the changes in the international market," Wang Ruilei, chief analyst at Boyin Precious Metal Investment, told the Global Times.
He said there were special circumstances where demand exceeded supply, offering room for gold and jewellery businesses to manipulate prices and consequently causing price distortions in the market.
"The penalty on the association and the five firms is small compared with the large profit margin for the industry but could serve as a deterrent to such price-fixing practices," Wang added.
The jewellery businesses involved are Shanghai Lao Feng Xiang Co, Cheng Huang Jewelry, Shanghai First Asia Jewelry, Shanghai Tianbao Longfeng and Shanghai Lao Miao Jewelry.
The news follows reports that Chow Tai Fook Jewellery Group, said to be the world's biggest jewellery retailer by market value, is also being investigated for price-fixing.