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 | Saturday, April 29, 2000, updated at 09:21(GMT+8) | ||||||||||||
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Wholesalers Safe From WTOChina's wholesale business will be able to meet the huge demands placed on it after China's expected entry into World Trade Organization (WTO), said Huang Hai, chief economist of Internal Trade Bureau.Actually, wholesale business in the country has always been in a tight corner in recent years,'' said Huang at a Shanghai seminar. The domestic wholesale market has never found a good way to develop since its opening to the outside in the mid-1980s. Since 1996, the loss of wholesale business has grown, resulting in a batch of enterprises that almost went bankrupt. "When the fragile domestic enterprises met strong foreign counterparts, the pressure became serious,'' said Huang. Compared with retail businesses, wholesale businesses can easily extend its operations to different areas and even countries. Without fixed business areas like retail stores, the speed of the wholesale business is faster than retail business. "I do not think the retail business will have an obvious change in the next two to three years," said Huang. The sales of foreign invested retail business only accounted for less than 2 per cent of the country's total sales last year. In Shanghai and Shenzhen, the two cities having more foreign invested retail business than other areas in China, the figure was less than 10 per cent last year. "And the fierce competition in the retail field, which is a headache to domestic enterprises, is certain to be a problem for foreign invested enterprises,'' said Huang, "I do not think there will be too many foreign invested enterprises that will want to squeeze into the field.''. "In the next three to five years after China's entry into WTO, some businesses will still be in the protection period, which both the government and enterprises should take advantage of,'' said Huang. Commercial enterprises must first restructure themselves. China is in transition from a seller's to a buyer's market, but most commercial enterprises did not make a big enough transformation, according to Huang. There are a total of 19.37 million commercial enterprises and privately owned small stores in China, meaning that every 1,000 Chinese residents own 16 to 17 commercial units. That figure is even larger than in many developed countries. But as far as sales go, only about 30,000 commercial enterprises saw yearly sales of more than 20 million yuan (US$2.4 million) last year. "The rate of merger is moving at a snail's pace among commercial enterprises while in foreign countries it is very common,'' said Huang.
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