Following a show of concern by its French headquarters, Carrefour's outlets in Shanghai begun to be more friendly in its fee negotiations with Shanghai's seed and nut roaster companies, which have stopped supplies to Carrefour's outlets in the city.
Supplies to the stores were stopped last month by 11 members of the Shanghai Seed and Nut Roasters Association, including famous seed brands A Ming and Zheng Lin. They were protesting against extra fees imposed by the French retailer.
"The previous negotiations between the association and Carrefour turned out to be in vain, as Carrefour apparently was not willing to hold talks seriously," said Chen Enguo, general secretary of Shanghai Seed and Nut Roasters Association.
"But after several overseas media reported the matter last week, the Carrefour headquarters have notified its Chinese operation to properly handle the matter," Chen said.
The French-based Le Figaro Economie reported last Thursday that Carrefour SA, the world's second-largest retailer, said fees contested by seed and nut suppliers were signed into their contracts, including celebration fees on French holidays and Carrefour's anniversary. The French retailer denied fees were unreasonably charged.
Before the dispute was reported in France, the French retailer refused to budge on the issue in Shanghai, postponing or even turning down talks. However, later last week, Carrefour's representatives began to require suppliers to submit detailed documents on their production cost and fees that had been charged by the hypermarket.
It will make a decision based on the documents submitted.
Domestic vendors have long complained about Carrefour's high fees, saying it has knocked off a bulk of their profits. Shanghai Seed and Nut Roasters Association invited Carrefour to negotiate on this issue, but the French retailer shrugged off such request, reasoning the association cannot represent enough suppliers and is not qualified for the talk.
The confrontation came to a head on June 16 when local seed and nuts roaster makers boycotted supplying to Carrefour.
Charging entrance fees from suppliers is common practice among domestic retailers and the income has become the major revenue source for retailers, as they can earn very slim profits from selling products.
Shanghai Commercial Commission suggested last September that the fees are only acceptable when they are agreed by retailers and suppliers.
(Shanghai Daily July 2, 2003)
