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)