The Competitiveness of Chinese Circulation Industry 1 Perspective on the Industrial Structure

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1 The of Chinese Circulation Industry 1 Perspective on the Industrial Structure LI Hui School of Business, Renmin University of China, P.R.China, Abstract: Since Chinese reform and opening up, circulation industry in China has made great achievements in the development. Circulation industry has become an independent industrial sector, and has achieved rapid development and great progress. As a new and important industry growth, circulation industry has made great contributions to Chinese national economy rapid development. But compared with developed countries and some developing countries circulation industry, Chinese circulation industry relatively backward in general. Perspective on the industrial structure, the paper analyzes the competitiveness of Chinese circulation industry status quo, existing problems and propose the countermeasures. Keywords: Chinese Circulation Industry, Industrial Structure, 1 Introduction Industrial structure is one of the important factors affecting the economic growth, and it is the important way of enhancing the core competitiveness of industry. From a static point of view, a balanced industrial structure could promote economic growth. And from the dynamic point of view, the sustained economic growth depends on the continuous optimization of industrial structure. Different industrial structures lead to different industrial competitiveness. The optimization of industrial structure is the intrinsic motivation to enhance industrial competitiveness. Figure 1 The Relationship Between Industrial Structure and Core Cultivation of The Leading Industry Superior resources together Forming the Core of the Leading Industries of Industrial Clusters Technology Spillover Effect Optimization of Industrial Structure Growth Pole Driving the Transformation and Upgrading of Traditional Industry Optimization of Industrial Structure The Promotion of the Overall Economy Core Competence Source: Lei Huaiying( 2009). The Study of Measurement Indicator System of the Industrial Structure. 1 Renmin University of China Graduate Research Fund Funding (Project Name: The of Circulation Industry The Analysis Based on the Perspective of the Industrial Structure; Item Number: 11XNH090). 167

2 The competitiveness of circulation industrial is the overall competitiveness of circulation industry in a country or a region, that the ability to occupy the market, expanse the market and obtain economic benefits of circulation industry relative to other countries and regions. The paper mainly analyzes the competitiveness of Chinese domestic circulation industry. Compared with developed countries and some developing countries circulation industry, Chinese circulation industry relatively backward in general. With Chinese rapid economic growth and harmonious development of economy and society, its enhancing the objective requirement of the circulation industry, and China faces the pressure from international competition after further expand opening up, China have to attach great importance to the problem Industrial. 2 The Measure Indicators Related to Circulation Industrial In this section, it briefly describes commonly measure indicators which used to measure the Circulation Industrial in international. Overall, the measure related to the Circulation Industrial index is divided into three levels, as follows: Table 2.1 The Evaluation Index System Industrial General The First Level The Second Level The Third Level Indicators (C) Indicators(A) Indicators (A) Indicators (B) B1 C1. Circulation Industry Contribution Efficiency D1. Capital Turnover of Wholesale and Circulation Industrial B2. Efficiency B3. Scale B4. Advanced C2. Circulation Speed C3. Overall Labor Productivity C4. The Total Retail Sales of social consumer goods C5. The Average Revenue C6. The Average Total Assets C7. The Average Number of Employees C8. The Proportion of Chain Stores Selling C9. Logistics Uniform Circulation Rate Retail D2. Capital Turnover of Catering D3. Overall Labor Productivity of Wholesale D4. Overall Labor Productivity of Retail D5. Overall Labor Productivity of Catering B5. D8. The Average Sales Profit Rate C10. Profitability D9. The Average Total Return on Assets D10. The Total Retail Sales Growth of C11. Growth Capacity Benefits Social Consumer Goods Source:According to Gu Xiao(2009). Primary Exploration of Evaluation Index System Industrial (in chinese)adaptation. 168

3 From the relevant indicators of the circulation industrial competitiveness evaluation index system in the table can be seen that circulation industrial competitiveness is the organic integration of competitiveness of circulation efficiency, competitiveness of circulation efficiency, competitiveness of circulation scale, competitiveness of circulation advanced, and competitiveness of circulation Benefits. 3 The Analysis on Chinese Circulation Industrial 3.1 The trade scale of wholesale and retail expanding, but the scale of the main flow smaller and less own brand In 2009, the total retail sales of social commodities in China reached 12.5 trillion Yuan, an increase of 15.5%, adjusted for inflation, the real growth of 16.9%, which is inseparable from the rapid development of circulation industry. In recent years, along with the country's rapid economic development, Chinese domestic circulation industry has shown a good momentum of development. Especially since 2004, both the quantity of the circulation companies and the size of wholesale and retail businesses have changed dramatically. From 2004 to 2008, sales of the national wholesale and retail enterprises rose from trillion Yuan to trillion Yuan, an increase of 1.4 times, and over the same period the growth of total retail sales of social commodities. It reflects the facts that the size of Chinese circulation industry growing. However, the scale of the Chinese main flow is generally smaller, the small and the medium enterprises are still the main of circulation industry. Decentralized management of the flow of the main proportion is higher. Currently, 93% of more than 1,700 million nationwide circulation enterprises are individual businesses; Only 1% is large-scale circulation enterprises; there are only more than 200 large-scale circulation enterprise which sales have exceeded hundred million Yuan, and sales have exceeded billion Yuan more than only 10. The dispersion of Chinese retail up to 90%, while only 40% of European and American countries, 50%of Japan. Meanwhile, the Chinese circulation enterprises lack the enterprise which with own brands. Compared with the large chain stores, such as Wal-Mart, RT-Mart, Lotus and Carrefour which have more than one own brands, Chinese circulation enterprises are lack of own brands generally for their scale are small. The business situations of small number of chain stores which have own brands are not ideal. 3.2 The domestic retail business diversity, but the proportion of wholesale and retail structure irrational Types of retail formats have been rich in recent years. In addition to traditional department stores, supermarkets, there are still a lot of shopping malls, specialty, specialty stores, convenience stores, warehouse stores, discount stores, non-store sales (such as online stores, telephone shopping, television shopping, direct marketing, mail order), and other formats. Although supermarkets, department stores, specialty store, stores, and other mainstream formats still account for a large share in retail sales (such as this proportion of the Beijing was about 75% in 2006), but from 2008 to 2009, the sales of the non-store, such as telephone shopping, online shopping, mail order, especially online shopping have the rapid development. Compared with the Chinese retail industry, with the attacking from chain, direct marketing, sales and other emerging non-store retail formats, the Chinese wholesale is backward, and there signs of shrinking. Whether consumer goods wholesale, or production wholesale are incompatible with the rapid development of the circulation. The role of the modern wholesale system in the circulation and resource allocation was reduced. Tough the wholesale market which based on primary transactions has developed rapidly, and bore a part of the wholesale consumer goods and production functions, but because of its inherent limitations, it could not take the root and proper role. 3.3 The wholesale and the retail market concentration not high 169

4 Although a variety of retail formats with a variety of circulation channels are fully playing an important role in the competition in the market, but the multiple channels coexisting which made the domestic wholesale trade decline sharply, and its market share continues to drop. For example, the wholesale business of Beijing accounts for only 1% of market share. Though compared with 2002, in 2008, domestic retail sales of the first hundred enterprises accounted for the proportion of total retail sales of social commodities has increased from 6.89% to 11.12%, 4.23% increase, but the circulation industry is still at a relatively low degree of market concentration level. In the situation which the absence of powerful large-scale wholesalers and retailers, both in the domestic market and the foreign markets, Chinese circulation enterprises competed with multinational circulation enterprises are obviously weak. And from the macroeconomic perspective, the wholesale circulation industry's decline is not conducive to efficiency and competitiveness of the entire circulation industry upgrading. 3.4 The low entry barriers of the circulation industry, the low level of circulation modernization Compared with the industrial enterprises, circulation enterprises operate easily, the demand of shop area is low, as long as the site is reasonable, proper positioning, and circulation enterprises could find living space in the market. It can be seen that the barriers of scale economy to circulation industry are not significant; the scale of circulation enterprises is small, individual tissue than significant, and the lack of economies of scale. Therefore, the main flow of the Chinese circulation enterprises have some defects, such as scattered, smaller, and the ability of against the risk is weak, the problems are very serious. At the same time, with the reflection of heavy manufacturing, light circulating by a long time, the knowledge about the status and the role of circulation is not enough, the level of the circulation modernization is low, the operation mode and industry form of the traditional abound, although the new methods of circulation developed rapidly, but the scale is small. In addition, the Chinese government infrastructure investment is not enough, the development of logistics circulation is slow, and the logistics has remained a major bottleneck impeding circulation development. 4 The Countermeasures to Enhance the of Chinese Circulation Industry 4.1 Build the circulation companies own brands, reach the scale economy effecting Large-scale circulation enterprises are the main carriers to promote the circulation modernization. One important indicator of developed circulation is own a number of internationally competitive large-scale circulation enterprises. To improve the competitiveness of Chinese circulation industry, the key is to develop a group of influential national circulation companies. It should encourage the circulation enterprises bigger and stronger and enhance their innovation capability, highlight the main business operations, achieve economies of scale expansion, and strive to cultivate a number of own brands and intellectual property rights and core competitiveness of the powerful large-scale circulation enterprises, and ultimately format economies of scale. 4.2 Promote the wholesale trade, optimize the structure of wholesale and retail percentage Modern wholesale business should change the original function and take the professional development. As a bridge between manufacturers and retailers, the wholesale industry should take full advantage of their special status, as manufacturers and retailers to provide information services. Meanwhile, the state and the region should focus on adjusting the proportion of wholesale and retail structure, it can not blindly focus on the development of retail trade, while ignore the wholesale trade, wholesale trade can not be over-support, and should be based on the actual development of the regional economic situation, optimizing the proportion of wholesale and retail structure, the flow of industry, the wholesale and retail trade to maintain a reasonable ratio. 4.3 Cultivating a large flow of the modern enterprise group, improve the wholesale and retail 170

5 market concentration Speed up the process of circulation modernization; improve the circulation and the scale of the degree of organization. On the one hand, increase the M & A efforts between the Chinese circulation enterprises, the survival of the fittest, optimize circulation of resources. Organizational structure of enterprises in the circulation generated in a number of adjustments to its own brand, strong core competitiveness of large-scale circulation enterprise groups, improve the circulation industry's competitiveness. On the other hand, speed up the chain development of the small and medium circulation enterprises, joint the small circulation enterprises, and improve the level of industrial scale and extent of business; give some support in policy, and ultimately the formation of the common development of medium and small circulation companies the flow pattern. 4.4 Train high-quality personnel of modern circulation; improve the modernization level of circulation Cultivate and foster the high-quality professionals of circulation. Government should encourage universities and companies combined through the "research", in the full development of high-quality circulation talent, the university's research results into practice in a timely manner. Meanwhile, employees continue to improve the circulation of professional knowledge and skills. Encourage the circulation of enterprise application of modern technology; establish the commercial facilities and networks. 5 Conclusion Circulation industrial competitiveness will become increasingly profound influence on the restructuring of Chinese national economy and sustainable development. Through this analysis, we draw the following conclusions: from the perspective of the industrial structure is concerned, compared with developed countries, Chinese circulation industrial competitiveness remain has a gap, China should through building their circulation enterprises own brands, fostering the large-scale modern circulation enterprise group, optimizing the circulation industrial structure, improving the level of circulation modernization and other strategies to enhance the Chinese circulation industry competitiveness. References [1]. Zhu Kunping. How to Promote the of Chinese Circulation Industry. Economic Review, 2007(2): (in Chinese). [2]. Li Zhiling. Primary Exploration of Evaluation System Industrial. Commercial Economics Review, 2005(2): (in Chinese). [3]. Geng Liping. Thinking of the Promotion of Chinese Circulation Industrial. China Business and Market, 2010(7): (in Chinese). [4]. Sun Jun. Discussion on the Strategy of Enhance Industrial Based on the Perspective of the Flow of Industrial Clusters. Commercial Times, 2010(8): (in Chinese). [5]. Gu Xiao. Primary Exploration of Evaluation Index System Industrial. Jiangsu Commercial Forum, 2009(11): 6-8 (in Chinese). [6]. Tian Yan. The Research on Circulation Industrial of Beijing. Market Modernization, 2009(8): 2-3(in Chinese). [7]. Lei Huaiying. The Study of Measurement Indicator System of the Industrial Structure. On Economic Problems, 2009(11):29-30(in Chinese). 171

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