Foreign hypermarkets accused of dumping practices

Foreign hypermarkets accused of dumping practices

JAKARTA (JP): The Association of Indonesian Retailers
(Aprindo) is accusing foreign hypermarket operators of conducting
dumping practices here in an attempt to drive local supermarket
chains out of business.

Aprindo's executive director Kustarjono Prodjolalito said on
Friday the operators were selling their products below
manufacturer prices to cut into the supermarkets' profits and
ultimately send them into bankruptcy.

He said the prices were generally 10 percent lower than
manufacturer prices.

"We have evidence that they are not merely offering discounts
to attract buyers, but selling their products at a loss in order
to kill local retail chains," he said.

Kustarjono acknowledged that retailers often offered
discounts, especially during special sales promotions which
generally last from one month to four months.

But he added that hypermarket operators offered low prices for
more than six months, which he believed showed they were willing
to eat losses in order to snuff out the competition.

"Those foreign hypermarkets such as Carrefour and Continent
are backed with huge capital and prepared to lose money for at
least four years. Their losses here mean nothing in U.S. dollar
terms.

"However, in the next five years, they will get their
investment back while most of their local rivals are on the verge
of bankruptcy, or even out of business."

Despite the fact Indonesia is struggling through its worst
economic crisis in decades, Jakarta consumers are seemingly being
overrun with the arrival of several new foreign franchise stores
vying for their attention.

Their arrival followed the signing of the letter of intent
between the government and the International Monetary Fund in
March last year, which required the country to lift its
restrictions on foreign investment in the retail and wholesale
markets.

Prominent among the newcomers are the French supermarket
chains Carrefour and Continent. Both entered Jakarta last year as
hypermarkets because they offer a wide variety of products,
ranging from groceries to clothes and household appliances.

Kustarjono said Aprindo would meet executives of Continent and
Carrefour to discuss ways to reach a mutually beneficial
solution.

"If we cannot reach a satisfactory solution, then we will ask
the government to become our mediator," he said.

Kustarjono also urged the government to restrict giant
retailers operating on more than 5,000 square meters of land to
the outskirts of major big cities.

"It is aimed at protecting the existing retailers in the city
and also to avoid the city from worse traffic problems," he said.

Jean-Luc Montembault, director of France's Promodes Group --
which owns 51 percent of PT Contimas Utama Indonesia, the
operator of the Continent -- denied the allegations on Friday.

He said the company slashed profit margins in the hope it
would be compensated by a large sales volume.

"It's not dumping," he said. "Because if it is, we can't be
doing that for a long time. At some point, you have to jack up
prices and by then we'll sink. It's purely the ability to manage
the flow of products from factory to us."

He claimed the company's strategy was intended to help
customers.

"It's a discount system: a low margin, big volume of sales, a
performing organization. In this moment of crisis, we can help
customers provide a wide range of products with cheaper prices."
(gis)