Dairy and property: How Japan’s crisis is affecting China

By George Chen
March 17, 2011
Chinese moms
While the rest of the world is trying to help Japan deal with the aftermath of its earthquake and tsunami, some parents in China and Hong Kong are on a single-minded quest to buy up as much made-in-Japan baby formula as they can. On my way to work on Monday morning, I saw a long queue of anxious-looking people in front of a grocery store. Over the following three days, the queue got longer and longer and more and more anxious.
They were all after the same thing – baby formula from Japan. This is simply because some Chinese parents believe their babies are accustomed to drinking Japanese milk and they are concerned that radiation may affect the quality of exports from Japan in coming months
Hong Kong media reported that retail prices for some Japanese baby formula have risen more than 30 percent this week. At present, the market price is about HK$250 (US$32) for a standard container and some retailers are reportedly limiting purchases to six per person to avoid angering latecomers. In this case, parents called on relatives, even elderly grandparents, to join the queue on their behalf (which works if you have many relatives and friends who are willing to help). Of course, Hong Kong parents are not alone in this concern. A fast-growing number of parents in mainland China are on a similar quest and they don’t mind paying HK$2,000 (US$256) for a round-trip ticket from major mainland cities to Hong Kong to buy made-in-Japan products.
People in Hong Kong, may soon face a bigger disappointment as a result of Japan’s earthquake – the possibility of property prices rising even further and faster. Local property agents say they have noticed some landlords want to increase rents, especially in downtown areas such as Admiralty and the Mid-levels, which are within minutes of Hong Kong’s Central financial and business district, where many international banks have their regional headquarters.
Global financial firms including Blackstone, BNP Paribas and Royal Bank of Scotland are relocating foreign staff, especially senior executives, from Tokyo to neighboring bases to avoid the possibility of radiation exposure. These executive typically head to Singapore, Hong Kong and Beijing, with most apparently happier to choose Hong Kong, if not Singapore.
Rents in Hong Kong are already a social problem, making the city one of the most expensive places in the world in which to live. The government has been trying to cool prices since late last year. With more rich but timorous bankers being relocating to Hong Kong from Tokyo and so far no indication of when they might return to Japan, the outlook for the property market in Hong Kong looks bullish.
I’m not saying this isn’t a positive  trend, but given what is happening to the lives of ordinary people in Hong Kong and China, the crisis in Japan is becoming a crisis for Asia, if not the rest of the world. If the nuclear crisis cannot be contained and people lose confidence in crisis management and post-crisis protection, a chain reaction may be seen in many areas beyond dairy and property prices.

Japan

By George Chen
The opinions expressed are the author’s own.

While the rest of the world is trying to help Japan deal with the aftermath of its earthquake and tsunami, some parents in China and Hong Kong are on a single-minded quest to buy up as much made-in-Japan baby formula as they can.

On my way to work on Monday morning, I saw a long queue of anxious-looking people in front of a grocery store. Over the following three days, the queue got longer and longer and more and more anxious.

They were all after the same thing – baby formula from Japan. This is simply because some Chinese parents believe their babies are accustomed to drinking Japanese milk and they are concerned that radiation may affect the quality of exports from Japan in the coming months.

Hong Kong media reported that retail prices for some Japanese baby formula have risen more than 30 percent this week. At present, the market price is about HK$250 (US$32) for a standard container (200g / 7oz) and some retailers are reportedly limiting purchases to six per person to avoid angering latecomers.

In this case, parents called on relatives, even elderly grandparents, to join the queue on their behalf (which works if you have many relatives and friends who are willing to help). Of course, Hong Kong parents are not alone in this concern. A fast-growing number of parents in mainland China are on a similar quest and they don’t mind paying HK$2,000 (US$256) for a round-trip ticket from major mainland cities to Hong Kong to buy made-in-Japan products.

Meanwhile, people in Hong Kong, may have to face an even bigger disappointment soon as a result of Japan’s earthquake – the possibility of property prices rising even further and faster.

Local property agents say they have noticed some landlords want to increase rents, especially in downtown areas such as Admiralty and the Mid-levels, which are within minutes of Hong Kong’s Central financial and business district, where many international banks have their regional headquarters.

Global financial firms including Blackstone, BNP Paribas and Royal Bank of Scotland are relocating foreign staff, especially senior executives, from Tokyo to neighboring bases to avoid the possibility of radiation exposure. These executives are typically asked to head to Singapore, Hong Kong and Beijing, with most apparently happier to choose Hong Kong, if not Singapore.

Rents in Hong Kong are already make the city one of the most expensive places in the world in which to live. The government has been trying to cool prices since late last year. With more rich but timorous bankers being relocating to Hong Kong from Tokyo and so far no indication of when they might return to Japan, the outlook for the property market in Hong Kong looks bullish.

I’m not saying this isn’t a positive  trend, but given what is happening to the lives of ordinary people in Hong Kong and China, the crisis in Japan is becoming a crisis for Asia, if not the rest of the world.

If the nuclear crisis cannot be contained and people lose confidence in crisis management and post-crisis protection, a chain reaction may be seen in many areas beyond dairy and property prices.

George Chen is a Reuters editor and columnist based in Hong Kong.

Photo: Policemen maintain order as customers wait outside a store called “Japanese Milk Powder” before it opens in Hong Kong March 16, 2011. REUTERS/Bobby Yip

3 comments

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You are correct that Japanese milk powder is being bought up in China right now however I think you may have glossed over the reason. Japanese milk powder is in demand because Chinese parents do not trust Chinese milk powder after repeated contamination and poisoning cases that continue to occur. Now that Japanese milk may also soon be unavailable or contaminated they are buying up as much pre-contamination milk as they can because their only other choice is switching to American or European milk powders which are also popular, but their baby will not be used to them.

Posted by Bineshi | Report as abusive

Shame on all who seek to profit off of others’ misfortune. Let’s shame them into keeping their prices down.

Posted by nkirv | Report as abusive

Premium 12.5 oz. formula cost $20.66 in the US. I just price checked. The blame on inflation is being munipulated. Either the Chinese are very wealthy or formula is a major expense.

Posted by dr.bob | Report as abusive