Today, more and more domestic retailers are aware of the keen competition from foreign invested enterprises since China's entry into the World Trade Organization (WTO). He Jihai, president of the China General Chamber of Commerce, answered relevant questions for the weekly publication Sanlian Shenghuo Zhoukan.
Sanlian: Why do domestic retailers have strong complaints about the over-expansion of foreign investments?
He Jihai: Many domestic retailers are dissatisfied that local governments approve of foreigners opening stores against relevant rules and regulations: some local governments have even give green belts over to foreign invested supermarkets which is forbidden for business use. Domestic retailers have found that foreign investment enterprise is enjoying greater rights than that of Chinese enterprise. In addition, a number of facts show that some foreign retail barons have begun to establish a nationwide business net. In line with WTO implementation here, there is still two years before the Chinese retail industry will fully implement its opening up policy. In dealing with the current retail markets situation, domestic retail enterprise has noticed that aspects of these circumstances have already overstepped WTO policy and relevant promises.
Sanlian: What are the problems in the development of the domestic retail industry’s format?
He Jihai: Up to now, there was still much room for improvement in the structure of the format of the retail industry. Despite the current traditional department stores in single-shop form, most chain stores are supermarkets, only occupying less than 10 percent of the total value of market consumption, while in other countries, supermarkets, discount shops, specialty stores and large lots constitute the main body of the market. Foreign retailers could also take the initiative to enlarge and expand their business according to consumer demand, keeping abreast of the times and gaining more portions of the market as well.
Sanlian: Have you any suggestions for the domestic industry in dealing with foreign investment competition?
He Jihai: First, enlarging and strengthening its regional sales scope. As foreign invested retail enterprises account for only about one percent of the country’s consumption market, domestic retailers still hold the dominant position in regional markets. We should lay a solid foundation through strengthening local business and expanding trade in other regions. We should have clear direction and avoid dispersing competition by taking part in too many aspects in the market that are uncompetitive. Also, we should, as soon as possible, occupy western areas and rural markets and develop the retail industry appropriate for farmers’ demand. Meanwhile, we should compete with foreign investors through cooperation and learn from their experience as well as strengthening ourselves, reforming structures and also holding shares in foreign investment.
(China.org.cn translated by Li Xiao, March 25, 2003)
