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Consumer Rights Should Corkage be Banned

This long-standing dispute involving the rights of restaurant owners and their customers may soon be decided in Beijing.

In a joint announcement in February 2007, the Beijing Consumer’s Association (BCA) and Beijing Catering Trade Association for the first time sent a clear message that they oppose denying customers the right to bring their own drinks into restaurants, whether independent restaurants or those associated with hotels. The announcement urged catering businesses to be more reasonable in marking up the prices of their wines and beverages so they will remain affordable to most of their customers, not just a select few.

The feasibility of the announcement was questioned, however, because the guideline was not regarded as compulsory.

“Many restaurants will probably not follow the call as it has no restraining force,” said a customer surnamed Du. “And, what is the ‘reasonable range’ of drink prices at restaurants? The industry association should provide a limit or ratio for the clarity of both restaurants and costumers.”

But consumers’ complaints do not come from nowhere. Many restaurants still stick to their old practices. “There is no ideal way to set a standard but through discussions between operators and consumers,” Mr. Chen, manager of the Yuxin Restaurant, said. “It is wrong that restaurants over-charge for corkage without restraint, however, customers should also realize that restaurants are providing their venues for consumption.”

But the catering groups’ announcement by no means represents an end to this debate. The BCA is negotiating with industry associations to thoroughly resolve the problem before the upcoming March 15 World Consumer Rights Day, according to Zhang Ming, secretary-general of the BCA.

The tussle between the two interest groups on corkage came into view again because of a lawsuit filed in the Haidian People’s Court in December 2006, which ended in the favour of a plaintiff who had been charged a 100-yuan (US$13) corkage fee because he brought wine to a restaurant.

The finding has been appealed by the restaurant. Its owners say they are not satisfied with the original finding and will continue to charge corkage fees based on their own pricing standards. Still, people are feeling more confident about bringing their own drinks into restaurants. “There were clearly more customers bringing outside drinks during the Christmas period after the Haidian court’s decision,” said Bian Jiang, deputy secretary-general of the China Cuisine Association.

However, restaurants are not giving up this component to their business bottom lines. As with the original defendant in the corkage case, most of the 100 restaurants and catering associations represented at a special meeting held on December 27, 2006, said they will continue to deny outside drinks.

Restaurants are reacting strongly mainly because alcoholic and other beverages are a major part of their revenues and profits. Statistics suggest that more than 70 percent of restaurants do not allow outside drinks or charge corkage fees. Sales of wine and beverages normally account for as much as 60 percent to 70 percent of their total profit margins, not only because they charge customers 30 percent to 100 percent more than retail, but because they also require a high “entrance fees” from wine and beverage dealers, an industry insider said.

But even if corkage fees are cancelled and consumers are able to bring their own drinks into restaurants in the future, industry insiders warn, restaurants may make up their losses by increasing prices of other items on their menus. Therefore, the best way to address the issue is for consumers’ and the catering industry associations to negotiate a more reasonable limit on beverage-price mark ups that is acceptable to consumers and the restaurants, said an official from the China Consumers’ Association (CCA).

Problems related to corkage, together with flight delays and coupon refunds have become new hot topics for consumers, according to a report issued by the CCA. Problems centre on not being able to get accurate and timely information in cases of flight delays and overbooking of flights without proper notice, which are sometimes simply dismissed by airlines as “international practice.” Yet, Chinese air travellers do not get the same compensation as that found in international practice. And stores often use coupon returns to entice consumers to engage in irrational consumption, while setting unfair limits on the usage of the coupons.

In addition to these issues, complaints about quality of merchandise and services still tops the list of consumer complaints, accounting for 64.3 percent of the total 702,350 cases received by the CCA in the year 2006. Cameras, both still and video, computers and automobiles are the top three products receiving the biggest increase of complaints. Food and health-product quality is seen as an emerging issue causing anxiety and anger among consumers. In services, disputes concerning various aspects of property management are growing rapidly (20.9 percent for the year) in the absence of special laws and rules regulating relationships between homeowners and property management companies. But the State-run telecommunications sector and its service providers are also receiving increasing complaints about a lack of transparency in their fees for services. Cheating related to e-commerce is also on the rise.

Despite lingering old problems and the emergence of new issues, total complaints received by the CCA declined by 0.2 percent in 2006 from 2005. On December 29, 2006, the CCA announced that it’s theme for 2007 would be “harmonious consumption” —perfectly in line with China’s strategic goal of creating a harmonious society.