Businesses Should Be Cautious in Making Advance Price Increase Announcement

An instant noodle manufacturer recently announced that it decided to increase prices for its "container instant noodle" (referring to both instant noodles packaged into a variety of "cup-like" or rectangular containers) from 1 April 2011. In China, this instant noodle manufacturer is considered one of the leading brands in relation to the instant noodle industry.  According to press reports, the instant noodle manufacturer has announced that due to increased transportation and raw materials (e.g. flour and palm oil) costs, it intends to raise the prices for most of its container instant noodles to RMB 0.5 per unit – this amounts to an increase of between 10% to 15% from current prices. [Note:  In the past month, several manufacturers of household and daily care products also made announcements that they were intending to increase prices of specified products due to an increase in price in raw materials.  See our article entitled Price Hikes for Washing Powders, Soaps