The Chinese Government will assist large companies and groups in the distribution industry to further promote reform and development of the sector.

"Our target is to help establish, in five to eight years, 15 to 20 large-scale distribution companies with well-known brands and self-owned intellectual property rights," said Di Jiankai, director of the commercial reform department under the Ministry of Commerce.

The distribution industry encompasses retail, distribution, logistics, catering and community services and involves the process of delivering goods and services.

Di expected the sales network and profitability of these companies would far exceed that of their domestic rivals, with some even matching international counterparts.

"Such large distribution companies will play a leading role in a number of aspects such as helping restructure the distribution industry, encouraging the growth of small- and medium-sized firms, promoting the manufacturing industry and creating jobs," he said.

To achieve this goal, the ministry will encourage large distribution companies to boost their business through mergers and acquisitions.

The ministry plans to set up a system for companies to monitor overseas investment risks, help guide their outbound investment and trade, and cultivate some leading regional distribution firms across China.

"We will continue to co-operate with the China Development Bank to support the establishment of infrastructure for a modern distribution network across China with policy-based low-interest loans," Di said.

The ministry set up pilot cities and provinces for distribution sector reform in 2005.

Twenty major distribution companies achieved sales revenue of 531.7 billion yuan (US$66.5 billion) in 2005, up by over 31 per cent year-on-year, while profit jumped 30 per cent year-on-year to 6.8 billion yuan (US$850 million).

The ministry is also expected to take measures to promote the development of the distribution industry.

For example, it will help co-ordinate between banks and companies to resolve or reduce some of the debts of State-owned distribution firms.

It will also help to rejuvenate the brands of some traditional Chinese firms.

The ministry predicted China's distribution industry would continue its rapid growth due to its increasing role in the market and rural reform.

According to the latest statistics, jointly published by the ministry and the Development Research Centre of the State Council, retail sales of consumer goods will exceed 7.5 trillion yuan (US$937.5 billion) in 2006, an increase of 13 per cent from a year ago.

Sales of production materials are set to top 15.5 trillion yuan (US$1.93 trillion), up 12 per cent on 2005.

(China Daily 05/09/2006 page9)

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