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Consumer goods: P&G raises prices by up to 10%

By Yu Tianyu (China Daily)
Updated: 2008-07-29 09:27

P&G products at a supermarket in Shanghai. Procter & Gamble, the world's leading personal care household commodities producer, has decided to raise prices for its products by as much as 10 percent in China, Zhang Qunxiang, spokesman for P&G China, said. [Asianewsphoto]

Procter & Gamble, the world's leading personal care household commodities producer, has decided to raise prices for its products by as much as 10 percent in China, Zhang Qunxiang, spokesman for P&G China, said.

As a result of soaring raw material costs, the company will raise the prices of Pampers, a disposable diaper brand and Whisper, a sanitary napkin brand, by 10 percent from the end of July, the spokesman said.

Water absorbent material and pulp, the main substances needed for diaper and sanitary napkins, increased by 50 percent in the past year, according to statistics.

Zhang said that the price rise was part of the company's strategy, previously announced to boost global prices by up to 16 percent in the middle of July.

Based on an earlier announcement, retailers would 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 previously.

Zhang admitted that the group had earlier increased pricing on P&G's shampoos and shower washes, but said that the increases were less than 10 percent. He also said that raw materials such as palm oil, coconut oil and animal fats, had increased by 150 to 160 percent in the past two years.

However, industry insiders suggested said that the rise in materials was not the only factor that lead to the company's product price rise. They suggested that huge advertising expenses was also putting pressure on the company.

Zhang said that the company has not seen a decline in sales so far and did not rule out further increases in product prices and said that the company would keep a close watch on changes in the prices of petroleum derivatives and domestic materials, and adjust product prices accordingly.

China Wal-Mart sources said their purchase department had seen price increases in hair care products and they had already received a notice of price increases on Pamper and Whisper from P&G.

One of P&G's major competitors, Unilever, reportedly increased its Lux shampoo and soap by 6 percent, also OMO wash power by 10 to 12 percent, and Zhonghua toothpaste by 20 percent.

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.

Liu Caifen, a 69-year-old retired teacher living in Beijing's Chaoyang district, said she did not care about the price rise as she thinks domestic household and personal care products are more natural and had less chemicals.