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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (4449)	2/22/2005 1:40:01 AM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

Effect of Wal-Mart appears in China Last Updated(Beijing Time):2005-02-21 16:09 Wal-Mart is the biggest retailer in America and its influence on its economy is profound. American economists are talking about the "effect of Wal-Mart": rising labor productivity and declining inflation. The "effect of Wal-Mart" that has an even deeper connotation is appearing in China. When enjoying the convenience provided by Wal-Mart, China has experienced the changes it brought about in economy and life. According to the rules of the WTO, China would open its retail trade to foreign investors three years after it entered the organization on December 11, 2004. In fact, its retail trade was opened to foreign investors and the 50 biggest retailers in the world entered China long ago. They are expanding rapidly here now. Before local enterprises had enough time to really enjoy protective measures during the protective period, foreign enterprises had finished high-end arrangements in China's retail market through some irregular practices. By virtue of their strength and more or less super-national treatment, foreign retailers plunged local commercial enterprises into an abyss of suffering. The result of the development of this situation is foreign retailers will spread throughout China and gradually occupy China's circulation channels. Based on an estimate, a big store measuring 10,000 m2 can substitute 300 small shops. When big foreign stores opened successively, one after another small shops closed down along the street. The result was the original owners of those small shops either lost their means of life or become employees and commercial circumstances was more and more concentrated and simplified. The purchasing power is limited in small and middle-sized cities where small and middle retail shops are oriented. How many shops will be closed there for the opening of a big foreign supermarket? According to the principle of efficiency, it's impossible for all labor in original shops to be employed by newly opened big supermarkets. They will either work as employees for probably lower income or lose their means of life and fall into poverty. There is a saying in French media that "those who control the commercial distribution industry of France will control the French economy and own France." This is also true in China. The impact of foreign retailers on domestic retailers is most immediate. Apart from this, they more or less rewrote the rules of the Chinese economy. There are thousands of suppliers under a big supermarket in the retail trade. The suppliers must follow its rules in supply of goods: varieties, prices, quality, ways of payment conditions for supplying goods, etc. These suppliers are weak, absolutely incapable of bargaining with the commercial giant. Some famous big supermarkets collect money for celebration of anniversaries, promotion, accession, etc. from suppliers and transfer business risks to them in disguised form. While retailers make profits, vast numbers of local suppliers take greater risks and earn money for their sweat and toil. There are even more enterprises behind these suppliers. For instance, a small factory that supplies noodles needs wheat from agriculture, machinery from the manufacturing industry, power from the energy industry and packaging from the chemical industry. The retailer is in the highest hierarchy of this industrial chain. If its occupancy rate is high enough, the enterprises down the chain cannot but follow its directions. Monopolization of the retail trade is not only reflected in monopolization of the market, but also in comprehensive monopolization of the economy. This is monopolization on a higher level. Monopolization of the retail trade not only has an influence on economy, but also exerts a subtle effect on the society and life. Many countries take measures to control expansion in the retail trade. The Japanese government regulates local governments and enterprises by law and local and foreign retailers are subject to strict examination and approval process. The relevant Chinese department has published the draft anti-monopoly law to solicit opinions and hopefully it's not too late. Source:CE.cn Related articles en-1.ce.cn