Chinese Demand Sees Baby Food Shortage in Europe

27 Apr 2013

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A sign limiting the purchase of baby milk formula powder hangs on the shelf in a supermarket in London

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, reports The Associated Press.

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 neighbourhood.

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

In Germany, the run on powdered milk started in February, according to dm, a major chain of drug stores, which are the main retail outlets for baby food in this country.

Sales clerks at stores in major tourist venues, including international airports and Berlin's Friedrichstrasse train station, noticed Chinese travellers piling shopping carts to the brim with boxes of one popular brand, Aptamil.

"We noticed that due to extremely high demand we weren't able to provide enough Aptamil baby food," said Christoph Werner, a spokesman for dm. "So we decided to limit the amount of Aptamil products temporarily."

Hong Kong also announced curbs in February on baby formula purchases by customers from mainland China. The multinational food company Danone in Britain said it had significantly increased the production of Aptamil, after leading supermarket chains Tesco and Sainsbury's said they had to limit formula sales. Stores elsewhere in Europe also limited sales of two other popular brands — Milumil and Cow & Gate.

"We understand that the increased demand is a result of unofficial exports to China to satisfy the needs of Chinese parents who want international brands for their babies," Danone said in a statement.

In China, however, the perspective is different.

Ma Zhigao, who lives in the southern Chinese city of Shenzhen, turned to his brother-in-law in Germany for supplies of Aptamil to feed his 2-year-old son. He soon realized a lot of his fellow Chinese were anxious to get hold of foreign formula.

He set up a side business buying formula abroad, supplying his family and selling the surplus online. The sales restrictions in Germany are cutting into his business.

"Following the ban from Germany, my business suffered a sudden decline, and after our own consumption, I have almost nothing left," said Ma, who works in construction. "I even have to calculate carefully to save enough for my child. I'm seriously considering closing my online business now."

Even regular Chinese retailers are feeling the pinch.


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