Setting prices too low

PUBLISHED : Tuesday, 10 April, 2012, 12:00am
UPDATED : Tuesday, 10 April, 2012, 12:00am


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The snack chain store 759 Oshin House, which sells goods at low prices, is widely seen as a socially responsible enterprise combating business monopolies.

But that reputation has suffered after retailers complained that 759 set prices too low, thereby creating another monopoly.

'759 used to be the victim of monopolisation but now it has evolved into a low-price monopoly itself,' said Chinese University economics professor Terence Chong Tai-leung. 'It does not violate any laws, [but it engages in] cruel business competition.'

In response to criticism from small retailers, 759 head Lam Wai-chun denied being a monopoly.

'We did not influence prices set by suppliers. We will definitely not set selling prices below cost,' he said.

It is not the first time 759 has received complaints from competitors about its low prices. The store chain hit the headlines last October when the Swire Group asked it to raise the price of canned Coca-Cola.

Some observers suspected that supermarket giants such as ParknShop and Wellcome may have been behind the move. The case raised questions about unfair competition and price monopolies among Hong Kong retailers.

759 benefitted from the controversy as consumers came to embrace the chain for its low prices.

The chain has boosted its number of stores from 11 in November to 68 shops today. Its annual turnover is on course to reach HK$50 million.