The discovery by the Consumer Council that Hong Kong's cozy supermarket duopoly is routinely misleading customers with false "special offers" will come as no surprise to those familiar with Hong Kong retail practices. In some cases, the Council found, the "promotion" price was actually higher than the regular price!
What this does is highlight the need for long overdue consumer protection legislation in Hong Kong. This could be modelled on the UK's law which requires a "sale price" item to have been sold at a lower price for a minimum period before it can be advertised as a special offer.
Meanwhile, the Hong Kong Monetary Authority''s head has reported that the controversial Lehman's minibonds, which have also raised concerns about inadequate consumer protection here, were classified as high risk by some of the banks selling them, medium risk by others, and low risk by yet others. If even the banks don't understand these products sufficiently to agree on how risky they are, they are certainly too complex to be palmed off on to unsophisticated investors.
The further so-called derivatives stray from any link to real goods and services, the harder it becomes to determine their real worth. For example, a valuer can tell you the price of a house in California. but if the mortgage on that property is packaged up into bits, bundled with hundreds of others, and sold to hundreds of banks worldwide, what is each of those bits worth? Lose sight of the fact that such products have a link to the real world, and the risk that their price becomes uncoupled from the value of the underlying assets increases dramatically. Which is exactly how the credit crunch arose.
Making It Better: The Consumer Council of Hong Kong
2 comments:
Pricing regulations is one thing, the other is the teeth to enforce it. If I remember correctly in the UK Trading Standards Officers who visited a store and found pricing infringements could dish out 10,000 quid fines for each infringement, which was a bit of an incentive to comply.
The free market argument that competitors with more ethical pricing strategies can spring up and customers can shop there if they wish would only apply if the government and big business stopped colluding to rig the market.
Not to mention the fact that the same conglomerates often own both the supermarket and the building it's located in. Show me a Hutchison/Cheung Kong development and it's a 10 to 1 bet that the supermarket inside is a PARKnSHOP. How willing are they going to be to rent space to a competitor?
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