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Shanghai's funeral homes said they have lost money when cremating bodies in recent years because of an increase in diesel prices.
Their relatively low cremation fees, which haven't changed in 17 years, have forced the industry to charge more for related services to make up for those losses, an industry insider said.
Cao Baofu, deputy director of Shanghai's Yishan Funeral Home, said it takes a loss of about 260 yuan ($41) on average to cremate a corpse, "because the Shanghai price bureau set the standard charge for cremation at 180 yuan as early as 1995, while the average cost, taking into account labor costs, electricity, machine depreciation and - most importantly - diesel fuel prices, has increased about nine times within 17 years to 440 yuan".
"Diesel fuel prices were about 1,000 to 1,100 yuan for 1 ton in 1995, but now the price has risen to about 9,130 yuan on average," Cao said.
He said he can only sigh about the "fixed and regulated fee".
The most recent hike in domestic oil prices came on March 19, when both gasoline and diesel prices were raised by 600 yuan per ton.
"Do you know how many times taxis have raised their prices within 17 years (in Shanghai) because of the increase in gasoline prices?" asked a staff member surnamed Yao at the Shanghai Funeral Service Center.
Yishan Funeral Home, the city's biggest undertaker when measured by the number of bodies it cremates every year, said its main sources of income are in its cemetery business and in storing ashes.
Industry insiders said detailed information exists about the profits the funeral industry makes from its secondary service and how far that money goes to recoup the losses it incurs from cremating bodies. However, the information is confidential.
"What I can say is that the funeral industry's profit margin on the high end is about 70 percent and it is about 30 percent on the low side," Yao said. "We're offering a variety of options for services that range from being very cheap to expensive."
Zhou Ye, who recently lost her grandma, said there aren't enough options.
"Most people, including me, go for the one package service that is offered at the hospital's morgue," the Shanghai resident said. "Before picking that package, I did try to deal with the funeral home myself to save money. But it's an extremely exclusive and monopolized industry. You feel like an outsider - that's when I chose the one package that cost nearly 10,000 yuan."
An official surnamed Wu with the city's Funeral Industry Association said he didn't think "robbing Peter to pay Paul" is a good way for the industry to tidy up its finances.
"The social effects wouldn't be good," Wu said. "The public would think we are in a highly profitable industry."
