After ZTO Express – a NYSE-listed Chinese express delivery company – announced it would hike the price of its deliveries, supposed rival YunDa Express followed suit on October 11, though the two didn’t reveal the amount of the hike. Regulators should be alert to a potential “tacit conspiracy” on service prices within the industry, warned Pan Helin, a postdoctoral fellow in applied economics at the Chinese Academy of Fiscal Sciences, in an article for Shanghai-based news site
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Pan noted that the price hike is understandable, as labor, material and transportation costs are increasing, and prices had barely increased for a some time. Industry data he cited show that average income per parcel was 14.65 yuan ($2.21) in 2014, 15.69 yuan in 2013 and 18.6 yuan in 2012.
Nevertheless, he warned that authorities should be alert to a tacit price conspiracy within the industry. With companies scaling up and the acceleration of capital cooperation, a feature is emerging – where several large companies operate a relative market monopoly. Given the close connections between some of the top Chinese express service companies, the possibility that top companies manipulate prices through a “conspiracy” mechanism while smaller players take a free ride thus cannot be excluded, he argued.
He added that price collusion usually takes the form of a tacit conspiracy – that is companies don’t need a specific agreement, but should understand the signal for cooperation. Still, if the extent and scale of the price hikes are out of the normal scope, anti-monopoly measures will be initiated to protect the rights and interest of consumers, he noted. Considering the extent of the price hikes by the two companies is unknown and whether other companies will follow suit is unclear, Pan said that whether there is definite collusion cannot be determined at present. But he suggested that regulators should pay close attention and prevent such a conspiracy to hike prices from happening.