Swiss food giant Nestle's $11.85 billion purchase of Wyeth, Pfizer Inc's infant formula unit, was approved earlier this week by China's Ministry of Commerce, a development which could lead to even higher milk powder prices for local shoppers.
China is one of the world's fastest growing infant nutrition markets and Nestle has long been working to capture a share of domestic demand. In fact, the company's sales revenue in the mainland was up 78 percent in 2011 compared to the previous year. And its sales continue to increase quickly along with the rising prices of foreign-branded milk powder.
Right now, the public's widespread distrust of domestic infant powder makers has allowed foreign brands to grab some 70 percent of the country's milk powder market.
As long as Chinese shoppers continue to doubt the safety of local powders, it would be highly surprising if the overseas food conglomerate did not leverage its position in the local market to further ratchet up prices.
The author is Xia Jinbiao, an economic commentator.