China Slaps Down Carrefour and Wal-Mart For Making Misleading Price Comparisons

A Chinese government agency—the National Development and Reform Commission—on Wednesday (Jan. 26) charged Carrefour and Wal-Mart with misleading pricing at 11 Carrefour and three Wal-Mart stores, according to a story in The Wall Street Journal and a statement on the agency's Web site.

The commission said the stores misled shoppers by claiming that the original prices on discounted items were higher than they actually were, thereby making the discounts seem greater, or by charging customers more at the register than the prices on labels or in advertisements, the Journal story said. The agency said both chains will be "severely punished."

The chains made the original price appear to be a lot higher than it really was? Isn't like accusing Nike of making shoes that encourage people to run too fast?

Comparing the real price with a mythical price that no one ever pays—as in "50 percent cheaper than the list price"—is what we call retail marketing. China is threatening fines (to the tune of five times the illegal income) that pale in comparison with what these chains pay in bonuses to encourage such chicanery.

If China's merchants are going to efficiently milk dry their billion consumers, China's government needs to study Wal-Mart and Carrefour instead of fining them. (Yes, the prior was intended to be tongue-in-cheek, as we attempt to head off some nasty E-mails.)