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| Mr. Jiang Zhengwei's portfolio is consisted of the Department of Commercial Reform and Development, the National Office for the Rectification and Regulation of Market Economic Order, and the MOFCOM Logistics Bureau. Mr. Jiang is also responsible for contacting with the provinces, autonomous regions and municipalities. |
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| Hand in Hand for a Splendid Future----The progressing and more liberalized Chinese market |
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| 2006-07-05 10:37 MOFCOM |
Mr. Chairman,
Ladies and Gentlemen,
Good Afternoon!
I highly appreciate the invitation to attend the Food Forum. It gives me an opportunity to gather together with all distinguished business leaders present today discussing on the perspective of the global retail industry.
The Summit, as a grand occasion for global food retailers and suppliers, offers an important stage for companies to show their strength, acquire information, enhance the communication and cooperation, and promote the common development. Please allow me to brief you on the current situation of China’s retail industry and the future policy orientation.
First, China’s retail sector has been rapidly growing in the process of liberalization.
In the past over 20 years since the adoption of reform and opening-up, China has transformed from the planned to market economy. The economic growth has also been shifting from extensive to intensive mode. People’s life is improving from the previous situation of just having enough to eat and wear to a comfortable life. Against this background, China’s retail industry has made a historical leap.
1, Market circulation is expanding. From 1978 to 2005, China's total retail sales of consumer goods increased from RMB155.8 billion to RMB6.7 trillion, up by 42 times with an average annual growth rate of 14.9%. Now, there are more than 15 million retail stores in China, primarily formed a circulation network covering all urban and rural areas.
2, The modern circulation mode came into being. Circulation modernization in China started in the 1990's. During the past over 10 years, new circulation modes like chain operation, logistics and e-commerce have been developing with a high speed. In 2005, the total retail sales of chain stores amounted to RMB781 billion, accounting for 11.6% of the total retail sales of consumer goods. The sales of department stores, supermarkets and specialized shops accounted for 45.7%, 32.6% and 20.1% respectively of the total sales of big retailing companies, becoming the main modes in the retail industry.
3, The commercialization of commodities is improving. Before 1978, most consumer goods in China's retail industry were distributed by means of plans. The circulation channels and procedures as well as the prices of commodities were decided by the government. Now retail in China is the most liberalized sector with 96% of the consumer goods and 95% of the agricultural by-products completely liberalized, or in other words, up to the companies themselves in terms of the sourcing, pricing, and marketing. Therefore the fundamental role of the market in resource allocation is getting stronger.
4, Foreign investment in the retail sector is growing fast. At the beginning of 1990's foreign investment acceded into China’s retail sector, which was expedited owing to the elimination of the quantity, geographical and equity share restrictions on foreign-invested companies in the retail sector since Dec. 11, 2004. By the end of 2005, China had altogether approved 1341 foreign-invested retail enterprises with committed foreign input of US$4.9 billion. 5657 foreign-invested stores were established covering an area of 13.88 million square meters. In 2005, 1027 foreign-invested retail enterprises were approved accounting for over 70% of the total number of newly approved enterprises of the kind. In the first 5 months in 2006, another 296 foreign-invested retail enterprises were approved. Now the global top retailers like Wal-Mart have all opened stores in China, which have achieved good economic efficiency.
Meanwhile a large group of Chinese retail companies have been conducting cooperation with the multinational companies in the process of opening up, which has resulted in mutual benefit and win-win outcome. Together they have made great contributions to the prosperity of the Chinese market and the social and economic development of China.
Second, the Chinese government will continue to create a good environment for the opening-up and development of the retail sector.
Sticking to reform and opening up is a basic state policy of China. As the competent authority in charge of the retail sector, the Ministry of Commerce, will continue its efforts in building a unified, open, competitive, orderly and modern market system to provide convenience for investors from all over the world and to push forward the rapid and healthy development of the Chinese retail industry. The future policy perspectives mainly cover the following 6 aspects:
1, Expediting the legislative process to improve the legal framework for circulation.
According to China’s WTO accession commitments, MOFCOM released in 2004 the Measures for the Administration of Foreign Investment in the Retail Sector, specifying the provisions on the qualification, investment area and application procedures for foreign investment in the retail sector. In the future, we will focus our efforts on promoting the legislative process to regulate the key players in the market, their behaviors and the market order in order to shape up a market circulation legal system compatible with the WTO rules and international norms.
2, Improving the relevant policies and standards to create a favorable development environment.
Since 2004, MOFCOM successively promulgated such regulations as the Outline for the Development of the National Commodity Market System and the Outline for the Reform and Development of the Circulation Industry. The national standard for the Category of Retail Business Modes has been formulated and implemented. And the State Council publicized its Opinions on Promoting the Development of the Circulation Industry. In the future, MOFCOM will continue to improve the policies and standards conducive to promoting the development of the retail industry. Efforts will be focused on working out rules for IPR protection, fair competition between domestic and foreign investment, regulating the relationship between the suppliers and retailers, breaking up the monopoly, and safeguarding the rights and interests of the consumers.
3, Promoting the urban retail network planning to guide the sustainable development of the retail sector.
Now, the planning of retail networks in municipalities directly under the central government, capital cities and cities with independent budgets in the state plan has been basically completed. On this basis, MOFCOM will strengthen its guidance of the localities, guide them to combine the development of the retail sector with the general city planning to avoid aimless development and waste of resources, improve the structure of the retail sector, and promote the coordinated development of different modes of the retail industry.
4, Deepening the reform in retail companies to sharpen their competitive edge.
The Chinese government encourages big retail companies to enlarge the business scale in the form of equity sharing and equity holding, merger and acquisition, franchising, and trusteeship. The government also encourages qualified retail companies to develop their overseas business so that a group of large retail companies will be brought up with strong major business covering both domestic and foreign trade, and international competitiveness. At the same time, small retail companies will be guided to adopt the information technology, modern circulation technology, good marketing modes and management expertise. In this way, the modernization level of small and medium-sized retail companies will be comprehensively lifted up.
5, Reinforcing the efforts in human resources development to improve the professional level of the employment.
MOFCOM will, through various means, intensify its training efforts so as to grow a team of human talents with the concept and perspective to carry out modern circulation and international retail business, well versed in modern circulation rules, management expertise and technologies, and good at running multinational businesses. At the same time, attention will also be paid to training the employees of small and medium-sized companies in order to improve the professional skills of all the workers in the retail sector.
6, Reinforcing the intermediary agencies so that they will play a better role as a bridge.
MOFCOM will further encourage the trade associations in the retail sector to reinforce their capacity, raise their sense of service, self-discipline and market forces, make them more capable of serving the industry and the businesses, and play a better role in the development of the retail sector.
Ladies and Gentlemen:
China enjoys a stable political environment, rapid and sound economic growth, huge market potential, and ample business opportunities. According to the Eleventh Five-Year Plan for the National Social and Economic Development for 2006-2010 designed by the Chinese government, China’s total retail sales of consumer goods by 2010 will exceed RMB10 trillion with an average increase rate of over 11%. The rapid growth of the Chinese retail sector will definitely inject strong vitality into the development of the global retail industry.
We sincerely welcome the Food Forum to convene the 2007 World Food Summit in China, and our warm welcome also goes to all the participants of the Summit to study the Chinese market and open your businesses here. The more and more open Chinese market will certainly offer all investors more tangible benefit.
In order to accelerate the development of China’s central regions, next year we will hold the Second China Trade and Investment Expo in the Central Regions. On behalf of MOCOM, I would like to extend our invitation to all people from the industrial and commercial circle present today to attend the Expo. The detailed information and written invitations will be mailed to you later.
Thank you!
Paris, June 23, 2006
(Source: Network Center of MOFCOM)
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