China wants retailers to toe the line
Peoples Daily pledges crackdown
November 13 2003
The Chinese government is promising a crackdown on foreign retailers “to bring an end to the circumvention techniques some big international names have used to break into the Chinese market.”
The Chinese Ministry of Commerce has drafted regulations which have been sent major foreign-funded retail companies for comment.
Offficial newspaper the Peoples’ Daily said the measures, which will sort foreign retail investors into three categories, are due to be implemented by January. Retailers will be ranked as those have never violated China’s rules and regulations, those with violations investigated by the central government, and those that continue to violate the rules.
Those in the middle ranking will not be able to establish new companies or stores in China for a year, while the bottom ranked retailers will lose all rights to invest in companies or stores.
The newspaper quoted experts who said “the measures will halt the Carrefour-style of expansion practised by foreign retailers in China during the last few years.” It suggests that the French retail giant was able to avoid central government intervention by signing contracts with regional governments.
Wal-Mart, Metro and the UK’s B&Q are among the retailers with expanding operations in China. The Ministry of Commerce has estimated that China’s retail sales will grow by 9.5 per cent next year.
