On July 4, the Information Office of the Ministry of Commerce held a press conference of special topic of “Retail and Wholesale Industries Promoting Economic Development”. Yao Jian, Spokesman of the Ministry of Commerce, Wang Desheng, Deputy Director-General of Department of Circulation Industry Development, Wang Xuanqing, Deputy Inspector, Guo Geping, Chairman of China Chain Store & Franchise Association and Cai Jin, Vice Chairman of China Federation of Logistics & Purchasing attended the conference and answered questions from the journalists. Conference minutes are as follows:

Yao Jian: Good morning, friends from the press and media. I am Yao Jian, the Spokesman of the Ministry of Commerce. Today, Mr. Wang Desheng, Deputy Director-General of Department of Circulation Industry Development, Mr. Wang Xuanqing, Deputy Inspector, Mr. Guo Geping, Chairman of China Chain Store & Franchise Association, and Mr. Cai Jin, Vice Chairman of China Federation of Logistics & Purchasing and I will introduce the development of retail and wholesale industries in the past five years and their roles in the development of national economy, and then we will answer questions that everyone concerns.

1. Retail industry plays an increasingly important role in economic development

Retail industry is one of important leading industries in national economy that connects from production in the upstream to consumption in the downstream. It directly affects and drives the growth of economic aggregate and industrial structure optimization, and concerns the living quality of the people. Since opening and reform, retail industry has experienced a leaping and radically changing development course, no matter in industrial scale and development speed or innovation in types of organization operations and improvement of modernization level as well as the contributions to national economy. Especially for the past five years, along with the implementation of policies such as the expansion of domestic needs, transformation of economic development methods, and the acceleration of development in service industry, retail industry has achieved significant development that rural and urban consumption markets are increasingly booming. The retail industry has played an increasingly outstanding role in leading production, promoting consumption and enlarging employment, and has become an important power to promote the economic and social development.

First, the scale of and contribution made by retail industry have been increasing. In the past five years, total retail sales of consumer goods in China grew at an annual average speed of 16.3% with the scale nearly doubled from RMB 10.8 trillion in 2008 to RMB 21 trillion in 2012. The sales scale ranks the second in the world. In the meantime, the employment population in the retail industry around the country increased from 45 million in 2008 to more than 60 million at present; and the number of operation units reached over 23 million. The proportion of added value from wholesale and retail industries in GDP rose from 8.3% in 2008 to 9.7% in 2012.

Second, the types of operation are increasing. In recent years, retail industry is accelerating in development of diversification, combination and integration of various types of operation. While the conventional department stores are accelerating their re-organization, more and more comprehensive and integrated large shopping malls come into existence; stores and franchised stores are developing rapidly; chains stores are expanding quickly; online sales reveal its vividness; convenience stores and warehouse stores show their potentials; the construction of downtown and commercial streets and the community commercial networks are well coordinated and developing simultaneously, and a good development pattern that combines tradition with modernization, mutually complements online with offline and achieves co-prosperity of various types of operations has been gradually formed to satisfy the multi-level and diversified consumption demands of consumers in a better way.

Third, the level of modernization has been improved remarkably. Along with the accelerating application of information technology and modern computer technology in the commercial fields, the levels of automation of commodity sales, the standardization of information management and automation of logistics, storage and transportation have effectively promote the level of modernization of retail industry. Meanwhile, the accelerating development of modern circulation methods such as logistics distribution and delivery, e-ecommerce and chain operation has improved the distributing ability in the retail field, reduced the procedure of commodity circulation and information delivery, and improved circulation efficiencies. In short five years, the transaction scale of online shopping has jumped up by 9.4 times from RMB 0.13 trillion to RMB 1.31 trillion in 2012. A lot of modern logistics centers have been successively built all over the country. The uniform delivery rate of chain supermarkets has exceeded 50%.

Fourth, the level of organization has been continuously improving. The rapid development of chain operations drives the improvement of organization levels, raising the proportion of sales of retail chain enterprises in the total sales of consumer goods in the society from 17.8% in 2008 to 19% in 2012. According to China Chain Operation Association, since 2008, the sales of “Top 100 Chain Enterprises in China” has increased from RMB 1.2 trillion to RMB 1.9 trillion; and the number of stores has climbed from 120,000 to nearly 200,000. A batch of large enterprise groups such as Bailian and Suning have been gradually formed in the domestic retail industry, and the course of group incorporation, scale and branding has been accelerating.

Fifth, the level of opening has been further improved. Up to the end of 2004, the transition period of China’s entry into WTO was over. The retail industry of China was completely opened without limits in region, category or types of operation to foreign-funded enterprises. From 2008 to 2012, accumulatively 32,028 foreign investment projects in the fields of wholesale and retail were approved around the country, accounting for 24.5% of the national aggregate; the amount of actual foreign capital utilization was USD 34.3 billion, accounting for 6.6% of the national aggregate at an annual growth rate of up to 20.9%; among others, the actual foreign capital utilization in 2012 was USD 9.5 billion, 2.1 times as much as that in 2008, with proportion in the national aggregate up from 4.8% in 2008 to 8.5%.

It has been clearly pointed out in the “Twelfth Five-year Plan” to take promoting development of service industry as the strategic emphasis of China’s industrial structure optimization and upgrading. In recent two years, relevant policies enacted in the country on promoting development of circulation industry are playing active roles. We believe that China’s retail industry will certainly accelerate in expanding new fields, developing new types of operations, fostering new hotspots and initiating new development courses in information, branding and network, playing a more active role in improving people’s livelihood, expanding consumption, leading the development of production, promoting economic growth and expanding social employment, and making new contributions.

2. The modernization level of production means circulation has been continuously improving.

Production means circulation industry is a very important industry in national economy in China that has been closely bound up with the healthy development of macro-economy. The circulation of production means directly serves the industrial and agricultural production and infrastructural construction, and has played an important role in organizing and leading production, guaranteeing market supplies, optimizing allocations of resources, and stabilizing prices. In recent years, the circulation of production means has been developing rapidly, representing the following features:

First, along with the rapidly development of China’s economy and continuous growth of economic aggregate, China’s production means market keeps expanding. After the total sales exceeded RMB 20 trillion, RMB 30 trillion and RMB 40 trillion in 2007, 2010 and 2011 respectively, the total sales exceeded RMB 50 trillion in 2012.

Second, while total sale is soaring, the modernization level of production means circulation has also been improving. The mutual complementation of multi-level and diversified transactions such as spot trading, wholesale market transaction, e-commerce and futures trading have satisfied the diversified and multi-level market demands.

Third, in the wake of the introduction of chain operation and e-commerce, the organizational level of operations in production means circulation industry has been further improved and gradually developed from traditional trading functions to extending to the upstream and downstream of the supply chains and expanding the range of value-added service. For example, Zhejiang Materials Industry Group improved physical distribution function by establishing e-commerce platform and steal processing distribution center, expanded market range and improved the level of professional level; Hubei Huarong Logistics Co., Ltd. kept increasing input in informationization, adopted RFID technology in operational activities and realized all-way informationized management in sales, warehousing, and distribution; TEWOO GROUP formed a complete set of supply chain management system covering from material purchase to sales of finished products by cooperating with upstream and downstream enterprises and enhancing relation between industry and commerce; China National Materials Storage Transpiration Corporation provided financing for small and medium sized enterprises by cooperating with banks in pledge supervision, and explored new business scopes.

Fourth, a pattern of production means circulation, in which many channels exist, has been formed. Since opening and reform, the production means circulation enterprises in China have gradually completed transformation into joint-stock enterprises, established modern enterprise system and become backbone enterprises in production means circulation; some privately-owned enterprises stand out and play a role as new forces in the circulation of production means; large production enterprises have gradually extended to circulation by establishing sales networks, and formed a pattern of production means circulation that diversified subjects consisting of state-owned, privately-owned and foreign-funded enterprises develop together and many circulation channels such as distribution by circulation enterprises, distribution agent and independent operation of production channels co-exist.

Fifth, “Two Markets and Two Resources” strategy plays an increasingly important role in adjusting the surplus and deficiency, balancing the supplies and demand and promoting healthy development of national economy. In recent years, the linking between China’s production means market and international market is becoming closer and closer and the linkage effects of domestic and international markets become more and more obvious. Foreign dependence on some important production means such as crude oil and wood exceeds 50% and the domestic prices of some important production means such as copper and steel are more and more affected by the prices in international markets.

I have briefed on production means circulation and retail industry in general, and we will have special reports on development of production means circulation and retail industry released on line today. Next, I’d like to ask Mr. Wang Desheng, Deputy Director-General of Department of Circulation Industry Development, to give an introduction to retail industry.

Wang Desheng: Hi, everyone. Retail industry is the most important fundamental strength in the commerce and trade circulation fields. In 2012, the retail industry actively dealt with pressure from changes in domestic and foreign economic environment and increasing operating costs, and maintained a good trend of steady coordination and development. The sales of commodities expanded further with employment population and operation area increased, playing an important role in improving people’s livelihood, expanding consumption and leading production and development.

Considering that the reports have been released on the website of the Ministry of Commerce, everyone that would like to get to know details may find the reports on the website. I will introduce the following contents:

First, the scale of industry continues to expand. In 2012, the total sales of consumer goods increased by 14.3% comparing with the previous year to RMB 21 trillion, obviously faster than the growth rate of GDP. It is estimated that the number of operation units and employment population in retail industry continued to increase up to 23.54 million and 61.34 million, which absorbed nearly one fifth of employment in the tertiary industry. In the retail industry, realized RMB 1.9 trillion of added value, creating nearly one tenth of the added value in the tertiary industry. The contribution rate for GDP growth was about 5.9%. Tax revenue of RMB 384.4 billion was realized, accounting for 6.9% of revenue in the tertiary industry, and 3.5% of total revenue in the country. Retail industry made active contributions for driving economic growth, enlarging employment and increasing fiscal and tax income.

Second, the types of operations have been better coordinated. Since the opening and reform, especially in the past 20 years from 1990s, the retail industry of China has completed the development course that costs foreign countries more than 100 years. The types of operation are complete, covering department stores, specialty stores, franchised stores, shopping malls, supermarkets, convenience stores, mail orders and direct sales, and develop in a well-coordinated way. Viewed from 2012, specialty stores and franchised stores keep the leading position while convenience stores serving community residents accelerates developing; new types of operations emerge such as large shopping malls, urban complexes and outlets. What is worth pointing out is the rapid development of online shops. In 2012, there were 24,875 enterprises in B2C, C2C and other retail outlets, growing by 19.9% compared with the previous year. It can be said that, the retail industry has formed a good pattern that various types of operation are well coordinated; network layout is basically reasonable; the traditional and modern operations bring out the best in each other and online and offline business complement each other, satisfying different levels of consumer demands.

Third, the level of modernization has been further improved. Modern circulation methods such as e-commerce, chain operation and physical distribution develop rapidly. In 2012, the amount of transaction of online retail in China lifted by 67.5% YoY to RMB 1.31 trillion, accounting for 6.23% of the total retail sales of consumer goods. The proportion of retail enterprises selling by POS was 11.6%, 0.4% growth compared with the previous year; the delivery rate of third-party logistics was 37%, 5% more than that in the previous year. At present, 80% of large and medium sized retail enterprises adopt computer management; over 70% of chain enterprises have established foreground POS sales time point system and background management information system and enterprise resource management system, and 30% of enterprises has entered the stage of digital management system integration that combining commercial automation technology, modern communications technology and network information technology.

To be specific, there are mainly four characteristics in the development of retail industry in 2012:

First, online retail has achieved high-speed growth and retail entities have accelerated adjustment. It is mentioned in the above that the amount of online retail transaction in China amounted to RMB 1.31 trillion in 2012, jump of 67.5% on a year-on-year basis and faster than any other countries. Meanwhile, the level of openness of transaction platform for online shopping has been further improved and the range of online retail operation has been further expanded. In order to correspond to the fierce competition, more and more traditional retail enterprises have accelerated in exploring online retail business and enhance operation of online channels. Some enterprises have built their own websites and some have entered and taken the market rapidly by merger and acquisition to obtain new competitive advantages by integrated development. For example, in 2012, 62 of top 100 chain enterprises around the country established online retail platform in different ways.

Second, retail channels have moved downward, and operating networks have been emphasized on third- and fourth-tier cities. In recent two years, the retail markets of many first- and second-tier cities have reached saturation with difficulties in increase of single-store sales and rise of operating costs while the potentials in third- and fourth-tier cities are still huge. As the rent and labor costs are low, together with the implementation of “market project of thousands of villages and townships” and introduction of relevant preferential policies in some regions, retail enterprises have developed rapidly in third- and fourth-tier cities. Some large chain enterprises extend their channels to small and medium sized cities and rural areas, and the numbers of retail outlets established in towns, counties and villages have increased remarkably.

Third, franchised stores have maintained a good development while department stores and supermarkets have faced more pressures. In terms of retail sales, business areas and employment population in 2012, franchised stores all accounted for 20%, increasing 1% compared with the previous year, with the highest benefits level among all types of operation. Specialty store remained the largest type of operation in the retail industry with sales accounting for 38%, even if the sales declined. Supermarkets and shopping malls faced more competitions and saw slow development; affected by online retail, shopping malls and shopping centers, department stores faced large operating pressures and accelerated in transformation. What is worth paying attention to is that, some large shopping centers developed rapidly in 2012 as an integrated commercial body for shopping, catering, leisure and entertainment. According to incomplete statistics of relevant associations, more than 50 shopping centers with over 350,000 square meters were newly established around the country, which satisfied the consumer demands for comprehensive service suitable for demands, accurate positioning and function emphasis and drove the development of relevant retail and service industries.

Fourth, transformation is explored for traditional business patterns and retail terminals have effectively played their roles. In 2012, some retail enterprises promoted the transformation of traditional business patters actively to construct a harmonious zero-supply relation and drive the improvement of circulation efficiencies mainly in the following three aspects: (1) to improve the proportion of independent operation, expand the range of buyout operating commodities and develop private brands according to customers’ demands and improve profitability; (2) to seek for transformation in supply chains. Many supermarkets actively adopted direct-harvesting and peasant-to-market patters to indicate dominances in ensuring commodity quality, reducing operating costs and leading production development. Some retail enterprises enhanced cooperation with suppliers, established common goals and improved benefits for all by improving supply chains and lowering costs; (3) to enhance precision management, and increase income and cut expenses with various measures including improvement of budget management, completion of incentive mechanism and optimization of commodity structures so as to improve the overall operational achievements.

For certain, there are problems in the steady development of retail industry, which are mainly that network layout and operation structure require optimization; operating costs increase rapidly; traditional business patterns face challenges and pressures of transformation; the matching services of physical distribution are to be improved and market order require further standardization. In order to solve these problems, it is required to insist on the guideline to expand domestic demands and promote consumption, and make consistent efforts in transforming development methods, improving circulation efficiencies, accelerating innovation and standardizing market orders.

Following the transformation of economic development, upgrading of residents’ consumption structure and acceleration of urbanization, informationization and new industrialization, especially the emerging and growth of e-commerce, it is expected that, in the later stage of the “Twelfth Five-year Plan”, retail industry will maintain a trend of steady growth, and the industrial development will focus more on improvement of innovation driving, structural optimization and quality benefits; retail enterprises will accelerate the transformation and upgrading and the integration of entity sales and online sales, enhance supply chain management, promote all-channel, composite operation and cross-regional merger and acquisition to continuously promote the innovation of operation, brand construction and green circulation development, and improve the level of organization and overall quality of the industry.
That is all, thank you.

Yao Jian: Next, Mr. Guo Geping, Chairman of China Chain Store & Franchise Association will give us introductions.

Guo Geping: Hello, everyone. Now let me talk about the development of chain operations and chain enterprises from the point of Top 100 in China.

In the wake of the rapid development of China’s economy and the application of modern circulation such as chains, chain operation has been developing in China for 20 years. It is a course of rapid growth. In recent years, affected by the changes in macro-economy and the habits of consumers, development of internet and application of information technology, changes have occurred in the retail industry.

First, rapid growth turns to steady growth. Viewed from the performance of Top 100 Chain Enterprises, the chain-orientation extent in the retail industry improved surged from 1997 to 2012, during which the sales of top 100 enterprises expanded by 100 times and the number of outlets increased by 30 times. The annual growth rate of sales exceeds 36%; the proportion of sales in total retail sales of consumer goods lifts from less than 1% to 11% or 12% at present. The development of chain operations has promoted the scales and intensifications of retail industry. China’s retail enterprises only takes twenty years to develop to the dominant power in the circulation fields, leading the industrial development.

In recent two years, the chain retail has transited from rapid development stage to the stage of steady growth. In 2012, the sales of top 100 chain enterprises upgraded by 10.8% and the number of outlets went up by 8%; these figures were the lowest since the statistics of top 100 chain enterprises. It is investigated and calculated that, the sales of top 100 chain enterprises and key enterprises will main growth of 10% this year, which transit from high growth stage to steady growth stage.

Then I will introduce the changes in major types of operation as what is said by Deputy Director-General Wang. For major types of operations, I would like to emphasize the development speed of two or three types, which develop fast and will increase fast in the ranking of types of operations in retail industry. The first type is convenience store. We have investigated more than 20 typical major convenience stores, which had a growth rate of 28% in 2012, higher than 10.8% for top 100 chain enterprises. The same store growth augmented by 17%, while the outlet growth increased by 14%. Especially for the same store growth, generally speaking, it will not exceed 5% for most enterprises, basically corresponding to the growth rate of CPI. Therefore, the same store growth for convenience stores is 17%. Next, convenience stores will develop competitive advantages in development of instant food, enhancement of service functions especially in butt-joining with online shopping, which have been focused by everyone at present. The other aspect is the shopping center. In 2012, the number of shopping center in China, according to a survey by our association and Deloitte, amounted to 3,000 with a total building area of 200 million square meters. It is estimated that the figure will reach 4,000 in 2015. For shopping centers, the growth rate is high. It combines with the development of commercial properties. At present, the prominent features of shopping centers are that, the shopping area is gradually reduced while that for catering and entertaining is increasing with proportion increased from traditional percentage to 30%, 40%, 50% or even 60%. The proportion of shopping is decreasing while those of entertainment, leisure and catering are increasing.

Another aspect is the changes of super markets and hypermarkets. Supermarkets are relatively saturated in first- and second-tier cities. Focuses of enterprises will extend to third- and fourth-tier cities, using more direct purchase modes and focusing on development of fresh, imported food and free brand commodities, as well as emphasizing on construction of distribution centers to improve the efficiency of the logistics supply chains.

Another type of operation is the department store, which has been impacted more by increasing costs and online retail. In 2012, the sales of major department stores increased by 10.3%; however, department stores adopt joint operations; therefore, there is little difference between stores. At present, department stores seek for transformation in operations such as exploring online sales, enhancing self-supports and purchase, lowering operating costs and especially improvement of customer experience. Some stores gradually turn to theme stores and shopping centers. Those with small areas have transformed to community stores or theme stores while those large areas have transformed to shopping centers.

For the direction of transformation in the industry: the first is to transform from scale and quantity type into efficiency and benefit type; to improve the efficiency of single stores by improving economic management. In recent years, the costs of enterprises have soared, especially the rent and labor costs, all of which are the main reasons to drive the costs up. Taking top 100 chain enterprises for example, most of which are large enterprises, the rent upgraded by 21% on average last year; labor cost rose 20.5% and water and electricity charges went up by 16%. What was focused in the first ten years was expansion while it is required to improve efficiency on the basis of expansion in the future.

The second is to transform from single channel to multi-channel, especially for entity retail. Faced with the challenged and pressures from online shopping, every enterprise can feel the urge. Those enterprises shall utilize their own advantages to develop online and offline operations. In our investigation, 62 of top 100 chain enterprises developed online retail in 2012, realizing sales of about RMB 30 billion. Only six of them realized sales of over RMB 100 million. Most were small and did not find real patterns, which are still under exploration. In a word, retail enterprises seek for transformation in two aspects: improvement of efficiency and transformation from single channel to multi-channel.

Viewed from medium and long terms, the retail industry in China will play a more important role in development of urbanization and driving domestic demands. Relying on the large markets, China’s retail industry including the chain enterprises will maintain a steady growth. Thank you.

Yao Jian: Next, we will have Mr. Wang Xuanqing, the Deputy Inspector from the Department of Circulation Industry Development.

Wang Xuanqing: Good morning, friends from the press and media. I am very glad to report the development of production means circulation industry in China in 2012.

Today, the development report of production means circulation industry in China will also be released later on the website, which is prepared by China Logistics Information Center and us. I will inform the brief content of the report here.

In 2012, backed by the stabilizing and improving national economy, the industry of production means circulation maintained a good trend of development with market sales remaining in a rapid growth, playing a fundamental and supporting role for production and construction. Generally speaking, the features are as follows:

First, the total sales kept increasing. In 2012, the total sales of production means amounted to RMB 50.1 trillion, increasing by 11.9% on a year-on-year basis, when calculated by comparative prices. Compared with that in 2011, the growth rate fell back by 1.3%. In addition, according to statistics and estimation, the total sales of production means realized from January to May this year amounted to RMB 22 trillion, going up by 11.7% on a year-on-year basis, and growing by 0.6% compared with the same period in 2012.

Second, the market price and the operating income of enterprise both fell. In 2012, the comprehensive average price in the production means market fell by 5.6% compared with 2011, and by 1.5% compared with that in the beginning of 2012. The total profits of 1,267 typical production means wholesale enterprises of the Ministry of Commerce amounted to RMB 88 billion, decreasing by 24.4% or RMB 28.4 billion compared with 2011. The overall sales profit rate was 1.59%, a loss of 0.6%. The average rate of return on assets was 4.18%, declining by 1.97%.

Third, the quality and efficiency of industrial development turned better to some extent. In 2012, amid the slowdown of macro-economy, fallback of demands and rise of factor costs, enterprises improved internal ability and followed the trend with industrial transformation and upgrading accelerated. The overall current asset turnover ratio of typical enterprises was 4.18%, 0.11% higher than 2011. The average asset-liability ratio was 64.85%, a drop of 8.73%. The average labor efficiency improved by 6%. The stock-sales ratio of major products was 4.2%, contracting by 0.7%. Amid unfavorable overall situation, and declining profits and prices, the value-added servicing capability of enterprises and risk-resisting ability were improving.

Fourth, large circulation enterprises continued to play the role as backbones. In 2012, 1,267 typical enterprises accumulatively realized operating income of RMB 5,542.6 billion, increasing by 4.5% on a year-on-year basis. 27 ultra-large enterprises realized operating income of over RMB 30 billion and a total income of RMB 3,420.9 billion, growing by 6.3% on a year-on-year basis. The larger the enterprises are, the higher the growth is. The growth was higher than that of all enterprises investigated. The operating income of 27 enterprises with operating income of over RMB 30 billion accounted for 61.7% of total operating income of all the enterprises investigated, going up by 1% compared with the same period in 2011. This indicates that the concentration of large enterprises in production means circulation industry was improved.

2013 is the first year to overall carry out the spirit of the 18th CPC National Congress and also the key year to link between the past and the future for the implementation of the “Twelfth Five-year Plan”; it is also an important year to accelerate the implementation of Opinions on Deepening the Transformation of Circulation System and Accelerating Development of Circulation Industry. Generally speaking, there are many uncertainties to be faced in the development of production means circulation industry. For overall development trend, we expect two major features: steadiness and acceleration.

“Steadiness” refers to that the overall development trend of the industry is steady with shrunk volatility. Along with the transformation of China’s economy from dependency on promotion of scale expansion to dependency on supports of structural transformation and upgrading, proper drops of growth rate is an inevitable trend. In corresponding to this trend, the scale of production means circulation will turn gradually from rapid growth to steady growth. It is expected that the total sales of production means market will amount to RMB 55 trillion, which is RMB 4 trillion more than RMB 51 trillion in last year. Regardless of the price factors, the actual growth margin is about 11%, basically the same as the growth rate of last year. Due to slow growth of demands, the conflict of excess production capacity is outstanding. It is expected the overall market price level will contract slightly compared with 2012.

“Acceleration” refers to that the transformation and upgrading in circulation industry will further enhance. More progresses will be made in the construction of modern circulation system construction and innovation of circulation methods. 2013 will be a year that circulation industry becomes more active and aggressive for transformation and improvement. The basic development trend is to accelerate in promoting the organic integration of traditional circulation and modern logistics to obtain efficiency by modern logistics, to enhance the ability of value-added service of circulation through the functionality of modern logistics and gain the third source of profits. Meanwhile, it is the direction of development in the future to actively participate in supply chain and share the added value of the whole supply chain. In terms of competitive ideas, the pure competition will be turned to competition plus cooperation based on supply chain. Thank you.

Yao Jian: Next, we will have Mr. Cai from China Federation of Logistics & Purchasing give us an introduction.

Cai Jin: Good morning, friends from the press and media. Mr. Wang has made an overall introduction to the production means circulation in this year and last year. I will make some supplements on that basis. The production means circulation industry is supposed to be an important component of national economic development. In the course of production and construction of national economy, especially in the course of accelerating urbanization and industrialization at present, production means have played an important supporting and guaranteeing roles. Viewed from the increasing total sales of production means in the past ten years, the average annual growth rate is over 16%, far higher than the growth rate of GDP. This is the actual but not the nominal growth rate. Therefore, in this aspect, production means supported the steady development of national economy.

Viewed from the change of the economic development modes, production means leave plenty of development room for improving the economic operating efficiency and the quality and benefits of economic development. On one hand, I believe that circulation, including the circulation of production means, plays a crucial role in optimizing and reasonably allocating resources to the balanced development of national economy in the operation of national economy. On the other hand, how to improve operational efficiency and efficient operation of national economy, and drive the efficient and effective operation of national economy, which also needs establishment of efficient and effective logistics system in the course of distribution, so as to support the efficient and orderly develop of national economy.

In this aspect, circulation of production means, also including circulation of other aspects, leave plenty of development room for improving the benefits and quality of national economic operation. The society, especially the media, must pay attention to and support the development of circulation.

Viewed from current operation of production means, Mr. Wang has given us a comprehensive introduction. As for the operation this year, the production means market maintained overall steady and rapid development from January to May. The actual growth rate of total sales of production means from January to May was 11.7%. It is steady compared with last year. The growth rate and level were almost the same. It was 11.9% last year and it is 11.7% this year. As what was introduced by Mr. Wang, the growth rate will maintain above 11% this year.

As we said it is steady, it means stable growth, the growth rate of which is maintained over 11% in each month. Therefore, a steady and rapid development trend is maintained. This is a basic judgment made according to the operation of current production means market. The growth of market is advantageous for the growth of national economy and the supporting role is remarkable.

As for the problems in the market operation, we focus more on oversupply. We believe that the main aspect of supply-demand imbalance is the oversupply rather than demand. It is the excessive and fast release of production capacity that lead to the oversupply and the weak market and even weak economic operation. For the growth rate, the total sales represent the demands of the market, the growth rate is 17% and actual growth rate is 11.7%, which is not low. However, the market price is still falling, reflecting the excessive and fast release of production capacity. Therefore, special attention must be paid to the control of excessive release. We believe that, the reversed mechanism must be adopted to urge enterprises to turn the elimination of outdated and excessive production capacity and control of excessive release to the self-conscious actions rather than passive reduction of production to control the capability so that the enterprises can make reasonable arrangements for production according to market demands and the market can play the guiding role. In terms of this aspect, we believe, it is required to limit the excessive release of production capacity, keep the balance growth of the market and maintain balanced development of supply and demands.

In this aspect, I think that structure adjustment is the most radical and durably effective mechanism to control production capacity. Viewed from market operation, it is required to stabilize the growth on one hand, and to adjust the structure on the other hand for the development of market. And viewed from the development trend of market or production means circulation, we believe that it is a key stage for transformation and upgrading at present. During the transformation and upgrading of enterprises and industry management, it is required to focus on promoting the continuous improvement and development of production means circulation system through transformation and upgrading. For certain, there are many aspects to be transformed and upgraded. However, I think, the key and most outstanding aspect is the change of circulation methods, which includes two aspects: 1. Commodity exchanges. It is a matter of transaction methods. From the angle of exchange methods, it is mainly for those with relatively concentrated production means. Take steal for example, 700 million tons of steel is actually produced by several tens of steel manufacturers, and the resources are concentrated. However, in the aspect of market, the demand is relatively scattered, which is called “demand fragmentation”. There are many demands for ten tons and eight tons or so. Therefore, in such cases, we should fully utilize the e-commercial platform, make innovations in transaction modes, and utilize the integration feature of e-commerce to integrate scattered demands for resources to improve transaction efficiency and lower transaction costs. At present, enterprises in production means circulation industry pay special attentions, and some large enterprises have gained deep practical experience in the course of developing and constructing e-commerce, including TEWOO GROUP, China Minmetals, and China Railway Materials Commercial Corporation, which have made their steps in construction of e-commercial platform and made great achievements.

Another problem to be solved is the logistics. It is required to find solutions against the current status of circulation, especially the status of “two lows and one high” of production means logistics in the field of production means circulation, which are low level of management, low efficiency of logistics and high cost. It is required to start from transforming the management modes of the logistics, vigorously promote the application of supply chain management mode in the field of production means circulation to gradually form a high efficient, orderly and comparatively secured logistics system, promote the improvement of the overall level of the production means circulation system and accelerate the modernization of production means circulation.
Thank you, everyone!

Yao Jian: Just now, five of us briefed on retail industry and wholesale business for production means circulation, the development reports of which have already been issued on our website, and I hope that would be helpful for your reporting. Now the floor is open for questions. The topic of this special press conference is closely related to our life, especially the retail industry; I hope you focus on your questions in retail industry and wholesale business, especially the female journalists present. We are so honored to have the two chairmen here; Chairman Guo, serving the China Chain Store & Franchise Association, is a very successful lady in domestic business circles; Chairman Cai serves the China Federation of Logistics & Purchasing, and is also a figure who usually can provide indicative introductions into China’s economic development, so we would like to leave more time for them. Now let’s begin.

China National Radio: I have some questions for Mr. Wang Desheng, the Director-General of Department of Circulation Industry Development. What is the development trend of the future retail industry? What kind of pattern lies in competitions between Chinese retail enterprises and foreign-funded ones? What will the Ministry of Commerce do next for enhancing the development of the retail industry, especially for completing regulatory environment of e-commerce? Thanks.

Wang Desheng: Next, we will give greater emphasis on structure optimization and improvement of quality and benefit, and step up information-based, brand-oriented, networking and conservation-oriented development while expanding consumption and providing more innovation supports. More specifically, a choice of retail enterprises is the integrated development of physical stores and e-retailing, providing mutual support for each other. On one hand, traditional retail enterprises will speed up the development of online retail business. As we mentioned, some enterprises will establish self-own websites; some will enter into or occupy network market via mergers and acquisitions, but the majority will gain new competitive edges through combination of online and offline retail. In terms of network retail enterprises, it will be based on the original advantages to pay more attention to publicity and display, and meet the consumers’ needs for experience. Many network enterprises launched the simulative experience and effectively reinforced their logistics, mode of payment, and quality guarantee and so on.

On the other hand, the retail enterprises will speed up their transformation and upgrade. First, the full channel business model will become increasingly apparent; the retail enterprises will no longer pursue the best and the strongest single channel, but further develop the full channel management, and will establish linked channel layout, to achieve high cooperation and integration among channels, and enable consumers to gain consistent quality service and shopping experience from the physical stores, network platforms, and mobile terminals. Second, the retail enterprises will pay more attention to management over supply chain, including efficiently collecting consumer demand information and quickly deliver the same to the production processes, deeply involving in the operation of the upstream manufacturers to achieve close linkage of the production and consumption, so as to maximize the benefits of supply chain enterprises. This kind of transformation will cause more consistent interests of both sides and bring about more harmonious relationship between retail and supply.
Third, degree of industry systematization will further improve. On one hand, the retail enterprises will actively expand their markets to small and medium-sized cities and rural areas and constantly enhance radiation ability through the development of chain store operations and franchising. On the other hand, the retail enterprises will strengthen integrative development with financial and manufacturing enterprises to integrate business resources and achieve cross-regional mergers and acquisitions through shareholding, joint stock, team output and other ways.

Fourth, business innovation and brand-based construction will accelerate. In order to adapt to the personalized, convenient, emotional characteristics of consumer demands, the department stores will promote fine and professional development, and achieve differentiated and competitive operation by providing more attractive brand portfolios and good service. The supermarket type of operation that we are familiar with will gradually be divided into high-end eco, fresh supermarket, community supermarket and other subdivided type of operations, and the convenience stores will offer more convenient and supporting services. The common feature of these retail businesses is to strengthen brand-based construction, develop private brands, launch custom brands, sell well-known brands, and improve service brands so as to enable the customers to form distinctive awareness, for the purpose of establishment and enhancement of their unique images.

Fifth, we will gradually realize green cyclic development with energy and cost saved to meet the requirements of establishment of the two-oriented society and objective needs of transformation of the economic development pattern. The retail industry will largely develop energy-saving and environmental protection construction, enhance technical reform and enlarge the purchase of green products and the marketing of low-carbon green products, such as the marketing of energy-saving household appliances that was introduced some time ago. A cyclic circulation system including marketing of low-carbon and green products, consignment of second-hand goods and reverse recovery of wastes will be set up gradually by cooperation with manufacturing enterprises and recycling and dismantling enterprises.

Your second question involves the trend of domestic enterprises and foreign-funded ones. First, since reforming and opening, especially in the last decade, in Chinese retail market, the domestic retail enterprises and foreign-funded ones have set up a mutual development pattern of competition in combination with cooperation. On the one hand, the gaps of domestic retail enterprises between the foreign-funded ones in the development of operating mode, development mode, commodity structure and management patterns are narrowing, and their market competitiveness has been strengthened further. On the other hand, the foreign-funded enterprises are developing quite well in Chinese market. Characteristics and advantages of foreign-funded enterprises have further developed in Chinese market, like concentration in elaboration of business format. For example, some large supermarkets such as Carrefour and Wal-Mart, focus on their business format and create their own advantages. Second, the foreign-funded enterprises have an excellent marketing efficiency, with a sale of over RMB 300 million in a single store, or RMB 200-250 million on average. The trend of competition and cooperation will be obvious more. Domestic enterprises and foreign-funded ones will obtain benign development in integration when they learn from each other.

With regard to enhancement of the circulation industry, the retail industry in particular, the measures taken currently, mainly reflect the following aspect:
Firstly, implementation of the policy to support industry development. Since last year, the State Council had issued in succession No. 39, Opinions on Intensifying the Reform of Circulation System and Speeding up the Development of Circulation Industry, and No. 47, the 12th Five-Year Plan of Development of Domestic Trade. That is the first time to issue the plan of circulation industry based on the national level. This year, the General Office of the State Council issued No. 7, Program for Decrease of Circulation Expenses and Promotion of Comprehensive Circulation Efficiency, which covers lots of policy details, including guarantee of required land for circulation industry, no less than 10% new community area to be used as business service area, implementation of total-revenue policy applicable to chain enterprises and head and branch organizations, charging regularization of commercial banks, optimization and adjustment of standards for bank card swiping charges, promotion of VAT and business tax threshold of small and micro enterprises, expansion of experimental units of VAT reform, cut of expenses in circulation and facilitation to logistics distribution, and so on. There is definite policy supporting some delivery vehicles to go to the city in specific time range. Those policies directly drive the development of retail industry.

Second, enhancement of planning and optimization of the development of retail industry. The 12th Five-Year Plan, as I just mentioned, definitely points out the key tasks and measures of retail development, under which, specific files were issued in succession last year for 33 industries including retail industry and circulation of production means. Currently, around the whole country, 289 prefecture-level or higher cities and over 60% county-level cities have formulated the planning of commercial network. The next step is focusing on the policy implementation. We will issue guidance directory of construction of commercial network, make the planning be a positive guide for industry development and optimization of structural allocation.

Third, serve enterprise development with public service platforms. Last year, we began to establish public service platforms for medium-sized and small trade circulation enterprises in 20 cities, and we intend to further enlarge the trial range this year, to gradually obtain a service promotion system for medium-sized, small and micro trade circulation enterprises in 3-5 years.

Fourth, guide industry development in a new marketing way. Especially some advanced marketing modes and operation modes will be promoted gradually in the industry, such as application of certain information technology, development of supply chain integration, development of branding and development of green and low-carbon circulation.
Fifth, normalized industry development based on the setup of laws and standards. In recent years, some laws and measures have been issued in succession for regulating the retailer-and-supplier relationship from 2006, including fair trade management measures between retailers and suppliers, fair trade behavior criterion and management methods of marketing by retailers and so on. Especially from the end of 2011 to September 2012, we, together with other five relevant departments, jointly checked and rectified the illegal charging against suppliers by large-scale retail enterprises. In addition, at the beginning of this year, we again arrange to further check and rectify the illegal charging so as to establish a harmonious retailer-and-supplier relationship. Recently, we issued a Notice on Trade Surveillance between Retailers and Suppliers that further requires local governments and authorities to enhance daily supervision over the trade between retailers and suppliers, and to strengthen the guidance of contract between retailers and suppliers, so as to promote the regulated business and effective fair development.

And we will also formulate standards. There are currently 55 standards associated with the retail industry, and next, we will expand the implementation and promotion of these standards in the industry to ensure the regulation of development of circulation industry and the improvement of management level. To sum up, the retail industry will develop in a healthier and more harmonious way. Thank you.

International Business Daily: My questions are to Chairman Guo. Based on the development situation of business formats, could you tell us the trouble and challenge that the retail industry is confronted with now in its development? what support the future development requires. Thank you.

Guo Geping: Just now, I generally briefed on the characteristics of several large-scaled businesses. The business of retail industry mainly has two keys: one is consumer management and the other is supply chain management. Consumer management is to grasp consumers, meet and create their demands, attract and keep consumers and provide them with their wants. Supply chain management is to control the upstream and improve efficiency. Nowadays, the two keys are challenging the retail industry. New technology provides technical support for us to firmly grasp consumers and to manage the supply chain better. For this moment, the retail industry has following puzzling issues or following management troubles: one is, in the new online shopping times and internet times, especially in the mobile internet times, how to realize transformation for the physical retail industry. Everybody knows the issue is urgent, but they still feel confused to some extent and want to know how to do it after all? Yesterday, our association held a panel discussion meeting in Shanghai of China Retail Leadership Summit and simultaneously there was an annual meeting of multi-channel committee focusing on the development of retail industry in internet times, both of which made a discussion about the issue.

The retail industry is in the transformation phase currently. Everybody is groping his or her way forward and desire learning and communication. A lot of exploration in many aspects was made in internet times. In the communication meeting yesterday, some enterprises introduced how to achieve more network functions (including Wifi) in business, how to make offline communication in online shopping and how to make interaction for physical retailers with their consumers and so on, and they also introduced the future tendency of network development, which is exactly the issue lying in front of all.

The second issue is cost increase. The raised cost increases human cost and rent. With the development of net sites and shopping centers, the cost rising tendency may slow down but the human cost will grow without any doubt. Enterprises are exploring change methods. Some put forward an advice of having three persons do the work supposed to be done by five persons and paying them four persons' salaries, which will not only improve the payment efficiency, but also improve labor productivity. For example, make a more reasonable schedule and so on; or like another example, an enterprise reduces the cleaner number by half, with its personnel taking the responsibility of cleanliness around them. Personnel can make things done with lifting a finger. Generally speaking, compared with foreign ones, Chinese retail enterprises have a large gap and also a large promotion space. Enterprises jointly present that Chinese retail tax rate is too high, especially for the chain enterprises. The unified tax duty is an insoluble problem for a long term. According to the existing tax system and taxation system, if one enterprise intends to operate in several regions, it has to register in the local area and the registered company has to pay taxes to the local government for its support. That will typically result in two issues: one is the company requires lots of persons to check taxes and finances. Take one enterprise as an example, it covers four provinces and has 60 subsidiaries, and simultaneously it has lots of persons dealing with local taxation, industry and commerce and other aspects. This certainly leads to the pickup in internal cost of the enterprise. The second issue is that enterprises cannot make unified tax payment since they operate their business in multiple areas and set local subsidiaries in those areas. For example, one company is deficit and another one gets profit, and the tax depends on the break-even point. However, for independent companies, their tax will not be offset. Even though it only pays at a tax rate of 25%, the average tax rate of the whole enterprise will exceed 30% or 40%, and for the enterprise that I said just now, the tax rate exceeds 43%. We recommend that relevant authorities practically implement the policy of encouraging chain operation enterprises to pay unified tax, and make regulations for chain operation headquarter (GROUP) reaching a specified scale to pay unified income tax in the area where the headquarter locates, or make regulations for cross-regional operation enterprise to pay income tax at the special platform of the State Administration of Taxation, and then allocate taxes of the central and local governments by technical means like internal hierarchic optimization.

Phoenix Satellite TV: I have three questions. The establishment of a free-trade zone in Shanghai was approved yesterday, so what does it mean? it will become a window opened by China to join the TPP? As we know, the Ministry of Commerce announced on July 1 to conduct anti-dumping & anti-subsidy investigation for the wine produced in the EU. Now, the negotiation with the EU is underway, and the tax rate for photovoltaic products would be raised in August if it fails. Does the announcement of anti-dumping & anti-subsidy investigation imply that the negotiation on photovoltaic products didn’t go smoothly? Is it possible to set up more obstacles for such negotiation? Besides, the National Development and Reform Commission has carried out anti-monopoly investigation into many foreign milk powder enterprises in China, is it a blessing or a curse for domestic milk powder companies?

Yao Jian: Let me briefly answer your questions.
With regard to the trial free-trade zone in Shanghai, the Executive Meeting of the State Council approved the general plan in principle yesterday, which has been reported by the media. As a department taking the lead to promote this work jointly with the Shanghai government, we have done a lot of preparatory work. As an important initiative for China’s expanding opening-up to facilitate reform and development, and a significant measure for implementing opening-up to drive reform and release the institutional dividends; the establishment of trial free-trade zone will have a positive demonstration effect on the next step of promoting the institutional changes of economic development. Without doubt, there will be a variety of problems in this practice, as it is a trial zone after all, and we will sum up experience to continuously improve and actively promote the same.

Speaking of the issue concerning photovoltaic products and wine, at the China-EU Economic and Trade Committee Meeting held last month, the two sides reached an agreement on taking further measures to properly resolve disputes on photovoltaic products, but the important consensus involves active facilitation for the negotiation on price undertakings. At this stage, relevant basic efforts made by the technical team of both sides for this negotiation are positive and constructive. I will communicate with and report to you if there is any further information.

China Consumer Journal: What do you think of the overall trend of China’s production means circulation industry in the second half of this year? In addition, I have another question for Chairman Guo; you said that the convenience stores developed quite rapidly last year, why?

Cai Jin: Just now, Deputy Inspector Wang Xuanqing specifically introduced the trend of production means circulation industry in the second half of this year. In general, the development of production means market will be stable, with an appropriate rapid growth maintained.

We expect that the gross sales of production means will keep grow at a rate of above 11%, based on a judgment at an overall level. Considering the special attention paid by enterprises to production means market and price, I personally believe that in the case of stable operation of the overall market, with growth at a moderate and even rapid speed, the price of production means in the second half of this year, compared with that over the same period last year, may decline to some extent. However, the space will be less, and for now the price of some products begins to be stable, even appears to rise again. Of course, whether it is a trend of recovery or change remains to be seen, the overall market price level is still low.

Since the overall level of production means price in the second half of last year was relatively low, low base in other words, we can therefore predict that in terms of the trend of production means price in the second half of this year, the less decline in overall price would be reflected at least based on the steady and rapid growth of market. Thank you.

Guo Geping: In my opinion, the convenience stores rapidly developed for the following reasons: first, changes in consumers. Nowadays, convenience stores primarily develop in the first and second-tier cities, with young consumers as the mainstream consumer groups, resulting in changes of varieties operated by convenience stores. Compared with packaged foods in the past, convenience stores now supply instant foods, breakfast, lunch and dinner foods to meet the demands of modern consumers; the changes of and additions to the varieties have contributed to the business growth. Second, enhancement of service functions of convenience stores. An enterprise may generally provide eight, ten even twenty kinds of service functions, including purchase of train ticket, movie ticket, payment of water and electricity, and telephone expenses, etc. These have expanded the business scope of convenience stores and improved the benefits. Third, development of the internet. As a solution to the last-mile distribution, convenience stores have an obvious future development trend. Some convenience stores work with online shopping and express companies to deposit products that can not be delivered to the home for taking personally by customers, highlighting the convenience of them integrated with the internet in the future development era of the internet.

Fourth, rate of growth in size and benefit of convenience stores higher than that of hypermarkets and supermarkets. Supermarkets and convenience stores have dominated the domestic development of fast-moving consumer goods in the preceding years, among which the convenience stores developed on a relatively low base, but now develop rather rapidly.

Beijing News: my questions are to Deputy Inspector Wang Xuanqing: what measures have been taken by the Ministry of Commerce to promote production means circulation? Is there any new policy to promote the same in the next step? Thank you.

Wang Xuanqing: the measures taken for production means circulation mainly include four aspects: first, establishment of policy measures and guidance of industry development. The Guidance on Promotion of Modernization of Production Means Circulation During the 12th Five-Year Plan Period issued by the Ministry of Commerce in 2011 sets forth the objectives and tasks of modernization of production means circulation in China for the next five years.

Second, implementation of pilot projects and model innovation. We have carried out comprehensive pilot projects with the Ministry of Finance in eight provinces and cities including Beijing, Shanghai, Tianjin, Chongqing and Liaoning, etc., with the main contents of model innovation of production means circulation enterprises, including the innovation in logistics and e-commerce. I should say that it has achieved some success. Trading platforms of production means and electronic off-the-shelf including steel and wood have preliminarily shown their active role in innovation. For example, steel price on the Mysteel site in Shanghai has become an important parameter for the steel price in the international market. The Baostar actively developed by Shanghai Baosteel for online steel trading has actually solved concentration and fragmentization of production through network.

Third, improvement of industry monitoring and statistics, as well as strengthening of information guidance. Since last year, we have established the industry development statistic system, which includes production means circulation, and this year is the first year to release statistical analysis report. In addition, the Department of Circulation Industry Development has issued the comprehensive index of China's timber market and the BHI jointly with China Timber Circulation Association and China Building Materials Circulation Association respectively.

Fourth, strengthening of establishment of standardization system. In 2012, with a focus on the promotion of National Association of Metal Material Trade, industrial standards of evaluation by levels of operating and management of steel circulation enterprises were developed and the related publicizing and implementing were organized. In 2013, additional 11 industrial standards involving production means circulation will be incorporated into the planning of this year. These are the work in recent years that I want to introduce.

The next step of work mainly includes the following four aspects:
The first is to continue promoting model innovation in the following three aspects: (1) to promote production means circulation enterprises to develop from traditional traders towards the integration of trade servers and supply chain; (2) to promote production means circulation towards e-commerce multi-level trade platform, especially that with information support and source integration; (3) to promote and regulate the integration of production means circulation enterprises and relevant industries, especially the financial industry, to develop some finance-like business.

The second is to continue driving standardization and informatization construction of production means circulation enterprises.

The third is to promote the construction of credit system, which is also a common issue in the current production means market, including consumer market. Through the cooperation with related departments, we hope to standardize enterprises' behavior by establishing the credit blacklist system.

The fourth is to cooperate with related departments to solve the problems with tax, land and water and electricity at same price faced by the production means circulation enterprises currently. Thank you.

China News Service: Director-General Yao, what specific measures have been taken by the Ministry of Commerce to standardize retailer-supplier relationship? Thank you.
Yao Jian: just now, Deputy Director-General Wang Desheng has answered some questions about retailer-supplier relationship, a hot topic, and now I will make brief supplement. As everyone knows, the relationship between retailers and production enterprises, the so-called suppliers, is an important part of promoting circulation, especially retailing development. In the preceding years, due to the formation of buyer’s market, especially overcapacity, the retailer-supplier relationship has some problems. The basic ideas for correcting these problems are as follows: the first is to strengthen legal system construction. The Ministry of Commerce and the Legal Affairs Office of the State Council have incorporated the Regulation on the Administration of Fair Trade between Retailers and Suppliers into the legislative work plan of the State Council for this year. The second is to further promote the supply of commercial facilities of many business types, not only large shopping malls, but also wholesale markets suitable for young consumers. The third is to strengthen the industry organizations of small and medium suppliers and to improve their bargaining capability. The fourth is to enhance the supervision by governmental departments, including the industry and commerce administration, and to regulate the behaviors of large-scale retailers.

Global Times: Chairman Guo, as for hypermarkets, what is the market share of foreign supermarkets such as Wal-Mart and Carrefour? Is there an increasing trend of monopoly? How should domestic supermarkets deal with it in the future? Another question for Chairman Cai, Chinese production means have high foreign-trade dependence, and now the common people say that whatever the Chinese buy, the price of the production means at the international market will rise, is that true? Why?

Guo Geping: foreign capital in Chinese retail market is basically in the field of fast moving consumer goods, the business types are relatively unitary, with focus on hypermarkets and supermarkets; the operation is fairly standard, and the foreign retailing is higher than domestic one both in overall efficiency and operation efficiency. The data of the Top 100 of foreign fast moving consumer goods released in 2012 shows that, the foreign sales account for 35%. In fact, foreign capital has encountered some difficulties in the development in Chinese market. With the expansion of scale, cross-regional development has also encountered some problems. I don’t think foreign supermarkets have a monopoly position in Chinese market at present or in the future. Foreign capital now still has a very low share in Chinese retail market, especially for single enterprise. The Top 100 Chains have a lower share in Chinese market than other countries; for example, the market shares of the top three food retail enterprises are 46%, 53%, and 30% respectively in the USA, Britain and Japan. Chinese Top 100 Chains only account for 11% in Chinese market.

According to the current trend, Chinese retail enterprises learnt and feared foreign enterprises at first, but now they believe in mutual development without fear, and this confidence is shown in the rapid development of domestic enterprises in the recent years. The industry also believes that we can well operate domestic market and enjoy mutual development.

Beijing Business Today: just now the leaders have mentioned that the online and offline integration is a large trend in the future; Director-General Yao Jian, is there any further market supervision policy in the next step? How much progress has been made for the regulations on administration of network retail? Can you reveal the general schedule? By June, all policies for promoting consumption have been launched, and then will the related departments introduce policies for promoting consumption in the next step, or not this year? Thank you.

Yao Jian: I have also seen data showing that the e-commerce in Beijing has grown very fast since this year, and its scale is already one tenth of the total retail sales of consumer goods. It contributes to nearly 40% of the total retail sales since this year, and such a good performance is owe to the fast e-commerce development in Beijing. Of course, we can see from another aspect that the development of online e-commerce can push and drive physical retail stores, and I believe the next step will be mutual integration, mutual promotion and mutual development of physical store, online store and e-commerce models.

With regard to consumption promotion, the transformation of economic development method mainly lies in the harmonious common development of consumption, investment and export promotion. Simultaneously, we have noticed that investment is generally a behavior of government, so it goes on faster; consumption is an option for consumers and it depends on many factors, so it is exactly the difficult and focal point for expanding domestic demand, and simultaneously, it also has a significant potential. Consumption can provide the maximum potential to the sustainable development of national economy.

Consumption expansion has following three keys: firstly, further expand commodity consumption with urbanization construction and development of city and countryside integration. Secondly, further promote the upgrade and update of potential consumption with product innovation and green development, and simultaneously drive the upgrade and update of consumption goods with the product innovation and green consumption. Thirdly, consumption is divided into commodity consumption and service consumption. In the wake of the increase of Chinese economic development and revenue, service consumption will be the key point in the next consumption expansion, especially in large and medium-sized cities. In my opinion, the three aspects will become the top issues in our next consumption boosting work.

Today, we had briefed on the effect on and contribution of retail and production means wholesale business to economic development. We also provided some relevant information for your reference. Thank you for your attention.

(All information published on this website is authentic in Chinese. English is provided for reference only.)