China Opens Wholesale Sector to Foreign FundsChina lifts the interdiction on foreign funds in its wholesale sector lately. Approved by the authorities, a wholesale enterprise was formally inaugurated Wednesday as a co-funded undertaking by Shanghai Yibai (Group) Co., Ltd. with Marubeni Corporation.Named as "Shanghai Baihong Trade Co., Ltd.", the company is to be China's first wholesale enterprise with foreign funds involved. According to Dong Shaocheng, president of Shanghai Yibai (Group) Co., Ltd., Chinese investment takes 51 percent of the stake of the joint venture. Japanese investment makes 49 percent. The gross investment of the enterprise hit 200m yuan, with a registered capital of 80m yuan, dealing mainly with wholesale business of domestic and self-supporting imported commodities within China. Services cover those involving exports, storage, commodities processing, transportation, etc. For a long time, the wholesale sector has been regarded as a "forbidden part " vital to China's domestic commercial circulation. Foreign funds were completely excluded. In June 1999, China promulgated the "Methods of Foreign-funded Pilot Commercial Enterprises" in which for the first time pilot items of joint ventures and cooperation were allowed in the wholesale sector in Beijing, Shanghai and Tianjin. Meanwhile, according to the WTO agreement framework that has been reached, China will gradually relax its limitations on the fields and amounts of foreign-funded enterprises in three to five years. It will cancel its distributed sale system and restrictions on wholesale, direct and retail sale. Experts told the journalist that the establishment of "Shanghai Baihong" not only marks China's first step of opening its wholesale sector, but also represents an important measure taken by Chinese commercial enterprises to forwardly answer the challenges by "entering the WTO". Since early 1990, China has been working hard to gradually abolish the three-class wholesales system under the planned economy. Many state-owned wholesale enterprises went bankrupt one after another. Traditional wholesale shrunk sharply. Experts think that despite the strike on domestic wholesale enterprises, foreign funds' participation will also bring advanced management concepts and technology to China which will be helpful for improving the general level of China's wholesale enterprises. As a famous large commercial group, Shanghai Yibai (Group) Co., Ltd. is also the only representative of the World General Merchandise Union in China's mainland. Set up in 1858, Marubeni Corporation is one of the five largest comprehensive corporations in Japan. It ranks 12th among the 500 top enterprises of "Fortune" in 1998. So far it has established 130 joint ventures in China with a total investment exceeding US$3.5 billion. By PD Online staff member Du Minghua |
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