Kodak denies monopolistic accusations
(China Business Weekly )
Updated: 2004-06-13 09:33

It is great for a company to be the dominant player in its market area, but being No. 1 doesn't come without headaches.

US-based imaging giant Eastman Kodak, which commands 50 per cent of China's film market, was accused last month of monopolistic practices in its China operation. But Kodak last week issued a statement, arguing that the company has never done anything to circumvent the normal processes of market competition.

"Customers make the decision when they purchase films, and Kodak wins the market with high-quality products and services," the statement said.

Ying Yeh, Kodak's vice-president said there are various film brands in the market, such as Lucky, Fujifilm, Konica and Agfa. "Kodak has never limited customers' choice," she said.

"It is not right to accuse a company of monopoly simply because it has won 50 per cent of the market. Different sectors have different situations," she said.

According to a report issued by the Fair Trade Bureau of the State Administration for Industry and Commerce (SAIC), some multinational companies command "obviously dominant" positions in the market and use their advantageous positions to curb competition.

The report - the first of its kind in China since the country started attracting foreign investment in 1978 - also named some companies, including Kodak and Microsoft.

SAIC said multinationals consolidate their positions through mergers and acquisitions, and mentions "Agreement 1998," signed by Kodak and the National Development Reform Commission, the then State Economic and Trade Commission and the then Ministry of Foreign Trade and Economic Co-operation.

Under the agreement, Kodak undertook to invest a total of US$2 billion to acquire all domestic imaging factories except Lucky Film. On its part, the Chinese Government agreed not to allow the establishment of any other joint-venture in the country's imaging sector from 1998 to 2000.

Insiders say the agreement gave Kodak three golden years to develop its China market free of foreign competition.

Statistics indicate that Fujifilm, Kodak's major competitor in China, had a 48 per cent market share before 1998. However the figure dropped to 15 per cent last year, as a result of Kodak's rapid progress.

"The real purpose for Kodak spending that money was not to acquire domestic factories, but rather to win precious time to expand in China," an insider said, on condition of anonymity.

Yeh thinks the accusation is "unfair." "We signed the agreement out of good will - helping the ailing factories and improving China's imaging sector."

Kodak introduced advanced technology and management systems in China. A large part of the products the company makes in China are exported. For example, 90 per cent of the disposable cameras produced in China are exported, according to Yeh.

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