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Mr. Bo Xilai's portfolio covers the overall affairs of the Ministry of commerce.
He is particularly in charge of the General Office and the Department of Human Resources. |
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| Greater Efforts in a Modern Distribution System in the Rural Area |
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| 2006-05-30 12:43 MOFCOM |
------Speech of Minister Bo Xilai at the National Field Conference on the Universal Rural Retailing Network Project
Today the Ministry of Commerce is holding the National Field Conference on the Universal rural Retailing Network Project. We are here to study the important speech made by Secretary General Hu Jintao at the Workshop for Ministerial Officials on Building New Socialist Rural Area, popularize the experiences of Jiangsu Suguo Supermarket and other companies in exploring the rural market, plan for the implementation of the Universal Rural Retailing Network Project and the Agricultural Produce Wholesale Market and Distribution Company Development Project. Vice Premier Wu Yi attaches much importance to this meeting and sends a letter to us elaborating on the requirements on the development of the rural retailing network and the exploration of the rural market. We must be earnest to study and implement these requirements.
On behalf of the Leading Party Group of MOFCOM, I would like to touch upon the following 4 points:
1, Encouraging progress has been made on the Universal Rural Retailing Network Project.
In February 2005, MOFCOM launched the Universal Rural Retailing Network Project to gradually push ahead the chain store businesses in the countryside, and build a modern rural retailing network with shops in cities as flagships, shops in towns as the main force and shops in the rural area as the basis to satisfy the consumption demand of farmers, improve the consumption environment in the rural areas, and push forward the agriculture industrialization. We will strive for establishing standard farmers’ shops in 50% of the villages and 70% of towns nationwide within 3 years. In the past one year, the experiments of the Project were carried out smoothly and widely welcomed.
First, the farmers welcome the Project. Chain store operation and centralized distribution guarantee the quality of commodities, especially food and farming materials, which help prevent farmers from being harmed by fake products.
Second, distribution companies welcome the Project. According to the survey MOFCOM carried out in Shandong, Jiangsu, Zhejiang and Anhui, the sales volume usually rises by 2 to 8 folds after the transformation of traditional family shops to chain stores.
Third, local governments welcome the Project. The Project have not only brought about more employment opportunities for the surplus rural labors, but also helped to improve the country outlook. Furthermore, it is also beneficial to the improvement of spiritual civilization in the rural area.
With one-year common efforts from various parties, the Project has had a good start and achieved some progress at the current stage. Preliminary statistics indicate that altogether 1150 distribution companies have opened chain stores in 777 counties and municipalities on trial basis, and set up or upgraded 71,000 farmers’ shops. These stores employ 350,000 people, bring along 7 billion investment from local enterprises. 100 million farmers are directly benefited. Shandong, Henan, Hebei, Guangdong, Hunan, Sichuan, Anhui, Zhejiang, Liaoning and Jiangsu are the top 10 provinces in terms of the number of farmers’ shops.
2, Experience drawn from the experimental efforts of the Project.
After started, the experiments of the Project have received great attention and support from different walks of life. The smooth process of the experiments is mainly attributable to the following 4 reasons:
First, earnest guidance from the State Council and great support of relevant departments.
The State Council attaches great importance to the exploration of the rural market, on which the leaders gave many important instructions. Premier Wen Jiabao personally inspected the Suguo Supermarket, and Vice Premier Wu Yi also visited the farmers’ shops in Zhejiang and Jiangsu. Mr. Bai Licheng, Vice Chairman of the CPPCC and Chairman of the National Supply and Marketing Cooperative, took time to meet with officials from MOFCOM and made instructions on building a better rural retailing network. The Ministry of Finance and MOFCOM jointly promulgated financial support policies to the Universal Rural Retailing Network Project. China Development Bank distributed credit plans to its branches to support the project. Other departments under the State Council and the CPC Central Committee also extend support and assistance to the Project.
Second, great attention paid, and effective supporting policies formulated by the local Party Committees and governments.
The leaders of Hubei, Guangdong, Anhui, Sichuan and Xinjiang Production and Construction Corp make special instructions concerning the Universal Rural Retailing Network Project. The provincial leaders of Shandong, Zhejiang, Hunan, Hebei, Jiangxi, Heilingjiang, Ningxia and Xinjiang have been personally guiding the experimental efforts of the Project. The local governments of Tianjin, Jiangxi and Anhui put forward a full set of suggestions on the implementation of the Project.
Third, earnest efforts of the competent commerce authorities in enforcement.
The local commerce authorities at all levels carefully drafted the implementation plans of the Project in accordance with actual situation of different localities. In Tainjin, Inner Mongolia, Qingdao, Henan, Sichuan, Shaanxi, Gansu, Ningxia, Guangxi and Chongqing, the commerce authorities established coordination teams. Principal leaders in charge of commerce in Hubei, Jiangsu, Shandong, Hebei, Jiangxi, Shaanxi and Hunan were personally involved in the research programs on the rural market network development. In Liaoning, Chongqing, Anhui, Xinjiang and Ningbo, the local commerce authorities published briefings on the Universal Rural Retailing Network Project. The Department of Commerce of Hebei Province promulgated documents in conjunction with the Supply and Marketing Cooperatives to promote the experimental efforts. The Departments of commerce in Hubei and Liaoning launched projects connecting farming with commerce. The Department of Commerce of Henan Province worked out detailed appraisal rules. In Gansu, Qinghai, Hebei, Shanxi, Liaoning, Jilin, Heilongjiang, Hunan, Yunnan, Shanghai and Ningbo, the relevant departments timely submitted the project review reports.
Fourthly, circulation enterprises take part in the project actively and play an important role.
Universal Rural Retailing Network Project provides a platform for circulation enterprises to exploit rural market, and various types of enterprises apply for demonstration.
Reviewing the experience in the past one year’s efforts in implementing the Project, we are deeply impressed by the earnest guidance of the relevant departments of the State Council and the CPC Central Committee, as well as the local governments and party committees, the hard work of the commerce authorities at all levels and numerous distribution companies, as well as the great support of the media. Allow me to express my sincere gratitude to all of you on behalf of the Ministry of Commerce.
3, Deep understanding of the good opportunities facing the Universal Rural Retailing Network Project.
The State Council and the CPC Central Committee have always attached great importance to the work of "Agriculture, Farmer and Countryside", and have put forward recently the great historical mission of building a new socialist countryside. There are historical opportunities for the implementation of the Project.
Firstly, while the farmers’ income is continuously increasing, their purchasing power is gradually enhancing. After the CPC Central Committee adopts a series of preferential policies for farmers, their income is remarkable raised.
Secondly, the main problems in rural consumption begin to change. Consumption safety becomes the prime concern. Farmers are anxious to buy genuine goods and eager for modern distribution modes in the rural areas.
Thirdly, the rural market has a huge potential and demand from farmers is to be explored. China has a rural population of 900 million, and the rural market consumption is playing an increasingly important role for the expansion of domestic demand.
Fourthly, there is an excessive domestic production capacity, which offers another reason for expanding the rural consumption. The National Working Conference on Economic Affairs put forward a request to expand the domestic consumption, especially in the rural area so as to balance some existing production capacity. With such latest developments as China’s per capita GDP exceeds US$1700, the farmers’ income increased with a high speed in the past 10 years, their consumption capacity and quality are upgrading, and the companies are more keen to enter the rural market, have all made it possible to balance, to some extent, the production capacity in China.
In order to address the issue of "Agriculture, Farmer and Countryside", the CPC Central Committee made a strategic decision to build a new socialist countryside. Developing a modern distribution network in the rural area is a part and parcel of the efforts in building a new socialist countryside. Party Secretary General Hu Jintao recently pointed out at the Workshop on Building a Socialist Countryside for Provincial and Ministerial Leaders that focal efforts must be made to address the issues that are the people’s biggest concern, most directly related with the most practical interests of the people to promote the development of a harmonious countryside. Premier Wen Jianbao said in his speech at the National Working Conference on Economic Affairs that continuous efforts must be made to implement the Universal Rural Retailing Network Project, and to support the extension of the urban retail chain to the rural area. A series of important instructions of the CPC Central Committee and the State Council serve as a strong driving force for the implementation of the project and bring about rare opportunities for the development of commerce in China.
4, Requirements for the work in 2006
According to the strategy of the CPC Central Committee on building a new socialist countryside, the Leading Party Group of MOFCOM decided to strongly push forward the Universal Rural Retailing Network Project in 2006. We will strive to establish another 100,000 farmers’ shops within the year, raise the percentage of counties with experimental shops in the eastern regions from 30% to 60%, from 20% to 60% in the central and western regions, and in areas with good conditions to 100%. Our target is to set up standard farmers’ shops in 65% of the villages, and 5% of the towns by the end of the 11th Five Year Plan period. To this end, I would like to put forward the following requirements for the work in 2006:
1, Consolidate the common understanding of the Project.
The Universal Rural Retailing Network Project has a great bearing on the interests of the country and the people.
Let me first of all talk about the benefits of the Project to the country. China’s development is well recognized by the whole world. For 27 consecutive years, China has kept a rapid growth of over 9.4%, which is unprecedented in the history of global economic development. It is predicted that we will keep a 7% growth rate in the coming several years. However China also has a hidden problem, that is, the low consumption rate, which is 20 percentage points than the world average. Some industries have been suffering from excessive production capacity. Where can we sell the newly produced products in order to reach a balance between supply and demand? The CPC Central Committee and the State Council have a foresight to make a strategic decision to expand domestic demand and make it a driving force for the economic development. In this process, expanding the rural consumption is of strategic significance. The province that makes better efforts in this respect will be the one that contributes more to the overall economic development of the whole country. There are many ways to expand the rural consumption, while the Universal Rural Retailing Network Project is one of specific measures.
Next, let me talk about the benefits to the people. Most victims of fake food products and medicines are in the countryside. It is a serious matter for farmers to have access to safe and high-quality food and medicines. The urban-rural difference lies with the quality of consumer products to a large extent. In order to solve the problem, we must take institutional steps to start from the very beginning in an effort to set up a sound distribution network offering safe and reliable products to the farmers. China’s distribution system is rather backward with high distribution cost, which has led to the situation that farmers sell their produce cheap while having to buy expensive industrial products. Consequently it will be an even slower process for farmers to get rich. Distribution for farmers, especially for those in the central and western regions, is therefore very important. The Universal Rural Retailing Network Project is one of the programs that can bring benefits to the people.
Premier Wen Jiabao pointed out at the National Working Conference on Economic Affairs that the priority area for infrastructure construction will be shifted to the countryside in the coming several years. We should also prioritize the rural area in the development of the distribution network. Distribution infrastructure construction in the rural areas is a matter featuring public welfare, which is not for the business owners to earn money, but rather to serve the general public. In 2004, the Opinions on How to Improve the Efforts in Rural Distribution Network Development jointly released by the 9 departments including the General Office of the State Council and MOFCOM explicitly says that “rural distribution infrastructure facilities should be incorporated in rural infrastructure construction.”
This work has a bearing on the farmers’ health and the basic quality of the whole nation. I hope that the heads of all departments of commerce of the local governments could attach importance to it and report to the provincial leaders. Infrastructure construction should not only include education, irrigation, sanitation and transportation facilities, but also rural distribution facilities. We are very happy to see that many provinces have already paid attention to distribution, incorporated distribution facilities in their infrastructure construction programs, and they consider the efforts in this regard as a part and parcel of their endeavor to build a new socialist countryside.
2, Earnestly learn from and popularize the experience of Suguo and other supermarkets.
The main reason why the venue of this conference is Jiansu is mainly out of the consideration of popularizing Suguo’s experience. Founded in 1996, Suguo Supermarket Co., Ltd. gradually expanded its chain stores in the rural area. After 10-year development, its shops in the rural area account for 60% of all its shops nationwide and the sales account for 52% of its national total. Having upgraded the traditional shops in the countryside with advanced management system and standard business operation, Suguo Supermarket supplies high quality, genuine quality and safe products and convenient services to the farmers. Among the 40,000-plus commodities supplied by Suguo, 70% are agricultural produce and agricultural processed products, driving up the development of over 1000 food-manufacturing enterprises, and becoming a bridge between hundreds of thousands of small manufacturers and various big markets. There experience is really worth learning.
Premier Wen Jiaobao once instructed MOFCOM to popularize the experience of Suguo. After carefully studying the experience, we find a modern value in it. The distribution sector supported by the old planned economic mechanism had low efficiency, high cost and big lost. Now Suguo sticks to the philosophy of scientific development and market rules to orderly pushes forward the business development with corporate forces. Good social results have been reaped. It has achieved a win-win outcome, in which the burden of the government is alleviated, the general public feel reassured, and the company is happy. Suguo’s experience is therefore worth popularizing.
Besides Suguo, other 14 retailing enterprises including Fudi of Hubei province, Haorizi of Hebei province, Nongzi Group of Xinjiang and NCS China Co., Ltd, and 23 local governments and commerce authorities will share their unique successful experience at the conference. Everybody should learn from each other on the basis of its own practical situation.
3, Push ahead the Universal Rural Retailing Network Project in steadily and surely.
This year the central government raised the subsidy on the farmers’ shops to 3000 yuan for township shops and 4000 yuan for village shops. There is an additional 1000 yuan for shops in the central and western regions. At the same time, the interest subsidy for loans to distribution centers is lifted and preferential polices are formulated for the central and western regions.
Financial support is important, but what is more important is implementation. The late Chairman Mao once said, “No good implementation equals to nothing proposed”. The heads of the commerce authorities in different localities should be personally involved in the work, carefully sum up the experience of the experimental efforts in 2005, and formulate implementation plans for 2006. Continuous efforts should be made to strengthen the coordination with the budget control departments, supply and marketing cooperatives and financial institutions, fully rely on such traditional networks as the supply and marketing cooperatives, farming technology service stations, foodstuff shops and post offices. All departments should be united to form a synergy. A down-to-earth manner should be taken in the implementation of the Universal Rural Retailing Network Project to guarantee its correct direction.
First, make a good control of the access of the experimental companies. A comprehensive knowledge about the applicants must be acquired such as the business operation, creditability, and financial strength in order to qualify good strong and desirous companies to enter the rural market, and keep those unqualified companies out.
Second, there must be a monitoring mechanism. Such items as the quantity, progress, quality, success rate, and farmers’ satisfaction degree should all be covered in the frequent inspection of the newly built and upgraded farmers’ shops. The information service system of the Universal Rural Retailing Network Project should be best utilized. The development of experiment companies should be timely monitored. Focal attention should be paid to fraudulent and risky companies with suspected practices of subsidy cheating, and decisive measures should be taken to guard against and prevent such practices.
Third, strengthen the project inspection and review mechanism. When inspecting and reviewing the projects, the local commerce authorities should strictly abide by the inspection procedures and standards. As from May 2006, MOFCOM, in conjunction with other relevant central departments and local commerce authorities, will carry out cross sample inspection on the implementation of Universal Rural Retailing Network Project. Qualified projects after the inspection will be listed on the MOFCOM website, receiving long-term social supervision. A volunteer supervisors mechanism will gradually establish. We should make concerted efforts to safeguard MOFCOM’s hard-won brand of the Universal Rural Retailing Network Project.
To accelerate the development of a modern rural distribution network, and better support the efforts in building a new socialist countryside, MOFCOM will initiate an “Agricultural Produce Wholesale Market and Distribution Company Development Project” to set up 100 large modern agricultural produce wholesale market and 100 large agricultural produce distribution companies for both the domestic and foreign market. MOFCOM has promulgated relevant documents. I hope all local commerce administrations should take the same active efforts as they devoted to the Universal Rural Retailing Network in implementing the “Agricultural Produce Market and Distribution Company Development Project” so as to make a good start and achieve tangible results this year.
Dear comrades, With arduous responsibilities on our shoulders, we are facing with a future full of hope. Fifty years ago, the late Chairman Mao said, “The vast countryside offers huge opportunities for great undertakings”. 50 years later, Party Secretary General Hu Jintao proposed the key historical mission of building a new socialist countryside in an earnest and down-to-earth manner. According to the important thought of “Three Represents” and the Philosophy of Scientific Development, we should seize the opportunity, proceed from the overall interests to make the Universal Rural Retailing Network Project and the Agricultural Produce Wholesale Market and Distribution Company Development Project successful, making contributions to the agricultural development, and wealthy of the farmers with higher income.
(Source: Network Center of MOFCOM)
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