Authorities in Shanghai recently fined five jewelry retailers a total of 10.09 million yuan ($1.65 million) for price manipulation. Regulators didn't stop there though - they also slapped the Shanghai Gold & Jewellery Trade Association with a 500,000 yuan penalty for its involvement in the matter.

Concerns about price tampering among Shanghai's jewelry retailers have existed ever since the association came into being in 1996. As the market began having a greater say in the price of gold, retail prices dropped and many jewelry sellers struggled to stay open. Despite suspicions that the association was colluding with retailers to prop up prices, those looking for concrete evidence to support such claims often came up empty handed.

The role of industry associations should be to promote best practices and maintain fair competition. But a lack of laws pertaining to such organizations allows them to exploit the price instability that still plagues many of China's markets.

The author is Xu Yili, a commentator.

yicai.com