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April 27, 2013

The Associated Press

In London, baby formula is being rationed. Parents in Germany, the Netherlands and Hong Kong have faced similar restrictions.

Chinese demand for baby formula leads to shortages elsewhere

The Associated Press

BERLIN - Yong-Hee Kim still can't believe that in a prosperous country like Germany, powdered baby formula would ever be rationed and that she would have to scour shops in the German capital to find the right brand for her 13-month-old son.

But that's what has happened since major retailers in Germany this year began limiting sales of leading brands of baby formula. Parents in Britain, the Netherlands and Hong Kong have faced similar restrictions.

The reason for the sudden shortage is a quirk of globalization - one that illustrates the complexities of supply and demand in a wired world.

Parents thousands of miles away in China have been using the Internet or tapping friends and relatives in Europe to buy up stocks of high quality European-produced formula - often paying much higher prices than they would here.

Chinese demand for foreign brands soared after drought in Australia and New Zealand cut supplies from China's major sources of imported baby formula. Chinese parents who have enough money have largely shunned local brands since a contaminated milk scandal in 2008 left six babies dead and another 300,000 sick.

With Chinese consumers turning to sources abroad, major retail outlets in Germany, Britain, the Netherlands and Hong Kong have limited sales of several leading brands of baby formula. In Europe, parents have been stockpiling the milk powder at home, further intensifying the shortage.

"They don't sell more than three boxes of formula per store anymore. So my husband and I are checking out all those stores, running from A to B, to make sure we can get the right baby milk powder for our son," Kim said as she watched her son at a playground in Berlin's leafy Prenzlauer Berg neighborhood.

"We even end up paying two, three or four euros more for a box," she sighed. "It's really annoying."

In China, however, the perspective is different.

Chinese retailers are feeling the pinch.

The Shenzhen Jiulong Trading Company used to sell dozens of boxes of imported formula each day but is now worried about shrinking supplies.

"We sell Aptamil formula to Chinese parents who don't have much trust in domestic brands," said Huang Juan, a sales manager for the trading company.





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