Business / Carrefour price gouging

Carrefour strengthens price monitoring

(Xinhua) Updated: 2011-03-10 10:43

GUANGZHOU - French retail giant Carrefour announced on Wednesday the establishment of a "price center" at one of its China stores to improve supervision of prices after being accused of overcharging customers.

At the price center located at Carrefour Xinshi Store in Guangzhou, Guangdong province, price coordinators are responsible to accept price consulting, solve price-related disputes, and refund customers for overcharged prices.

The price center also employs customers to work as price inspectors to enable public supervision of prices.

The National Development and Reform Commission (NDRC), China's top economic planner, singled out Carrefour and Wal-Mart for either over-stating discounts by inflating pre-discounted prices or for charging prices higher than what was labeled or advertised.

The charges were made in a statement posted on the NDRC's website on January 26.

The two global retail giants had allegedly engaged in such practices in various Chinese cities, including Shanghai, Kunming, Shenyang, Harbin and Chongqing, according to the commission.

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At the establishment ceremony of the price center, vice president of Carrefour China, Hardy Cao, said the operation of the price center is an attempt for the company to strengthen its self-discipline on pricing and restore its damaged credibility in China.

"We confess our mistakes in overpricing and accept whatever punishment is decided by the Chinese government," Cao said.

The 19 targeted Carrefour and Wal-mart stores were each fined five times the amount of "illegal income" received by overcharging, or up to 500,000 yuan ($76,202.09) if the amount cannot be calculated.

The Carrefour stores have already paid all the fines and refunded customers five times the difference between the price charged and that on the labels, Cao said.

Furthermore, Carrefour has issued three written statements to apologize for overcharging since the price scandal was unleashed in January.

Wal-Mart also apologized to customers after being blacklisted and has launched self-examinations in stores nationwide.

If the price center is proven to be useful in solving price-related problems, Carrefour will open more price centers in its Chinese stores, Cao said.

Earlier this month, Eric Legros, president of Carrefour China, stated in an open letter to the employees that the company had included proper pricing as a criterion for performance assessment, and he hoped that the price label incident could be an opportunity for Carrefour to improve its management mechanism.

So far, Carrefour is operating 185 stores in China and it is planning to open another 25 stores in the country by the end of this year.

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