14 - China’s Legal Regulation of the Abuse of Market Power by Large Retailers

Summary

Chapter 14 explores how this debate over supermarket power has manifested itself in China, where disputes between large retailers and suppliers regularly occur and have been at the core of legal developments. In this country, the supply of commodities generally exceeds demand which, in turns, leads retail channels, especially those provided by well-known large retailers, to effectively become scarce but valuable resources. Furthermore, the combination of the majority of small and/or medium-sized suppliers in China operating on a small-scale, the fact that they are scattered throughout the nation and the high degree of homogeneity between the products they provide has resulted in fierce competition among suppliers. Due to such factors, it is difficult for suppliers to form a coalition capable of successfully bargaining with large retailers. Also these factors currently permit large retailers to enjoy positions of market power; commonly they enjoy a comparatively advantageous position over that of suppliers, which they abuse in order to bully suppliers into submission. To combat this issue, China has introduced legislation and regulation. However, due to the lack of clarity concerning the interplay between different laws and regulations, there are challenges inherent in their practical application.