"It will be good news to foreign investors as the new lift will encourage more foreign investment and business opportunities in China's commerce and circulation sectors that are still dominated by State-owned funds,?said He Jihai, president of the China General Chamber of Commerce, the country's semi-official department that oversees the sector's growth.

The organization has become an industrial line-up institution following two instances of ministerial restructuring in the past four years by the Ministry of Internal Trade and the State Administration of Internal Trade as a move to lift administrative controls on the domestic market.

Wu Jinglian, a renowned economist with the central government's think-tank the Development and Research Centre of the State Council, also called for the speeding up of restructuring in China's circulation industries so they can get in line with China's rapid economic growth.

Despite other sectors?step-by-step opening-up, an aggressive reform plan for China's commerce sectors appears to be ready to debut.

According to a government white paper released recently by the chamber, China will allow foreign companies to set up joint ventures to run retail businesses in all areas with the exception of those dealing with products in seven categories: cigarettes, books and periodicals, medicines, pesticides, fertilizer, agricultural membranes and oil. Control over these products will be dropped in the coming four years.

In the wholesale sector, foreign companies are allowed to launch joint ventures in all the major product areas with the exception of the same categories listed above.

"Foreign companies will be much encouraged to merge with domestic commerce industries starting next year,?He said last week.

In the newly revised industrial index for foreign investors released in 2002, foreign companies were also encouraged to flood funds into the wholesale, retail and logistics sectors for general commodities.

Since the founding of the first Sino-foreign joint venture retailer in 1992 in Shanghai, large retail multinationals have greatly expanded their business in the China market. By the end of 2001, there were already 210 overseas-funded retailers launched in China covering 386 branches and outlets in big cities in coastal areas, such as Beijing, Shanghai, Shenzhen, Tianjin and Guangzhou.

Overseas-funded retailers and wholesalers have already taken 1.55 per cent of the country's market share by revenue.

Wal-Mart, the world's largest retailer, announced it would set up another eight stores in China, to add to the 19 stores it had by 2001. Carrefour added another 10 stores in China, extending its operating network to 27 stores by 2001.

Apart from setting up branches and outlets in China, multinational companies like Wal-Mart and Carrefour also opened global procurement centres in China. Wal-Mart's annual procurement has reached more than US$10 billion in China due to the availability of high-quality, inexpensive products in the country.

(Business Weekly December 17, 2002)