Circulation industry will take up 12% of GDP

(China Daily HK Edition)
Updated: 2007-01-12 10:26

SHENZHEN: The circulation industry in South China's Guangdong Province will contribute at least 12 percent from around 9 percent over the past five years to the gross domestic product (GDP) by 2010.

The effort, aimed at accelerating the development of the industry by 2010, mainly includes wholesaling, retailing, catering and logistic sector.

According to the plan, the added value of the circulation industry is projected to hit 250 billion yuan ($31.9 billion) in 2010 and employ 15 percent of the total workforce.

Industrial analysts said it is a clear signal that the provincial government will allocate more resources to realize strong growth of the industry.

"It would be another significant opportunity for the circulation industry," said Sun Xiong, president of Guangdong Chain Operations Association.

The industry's latest turning point took place in 2002 when the government listed chain operations, modern logistics and middle-to-high-end wholesaling markets in the No 1 government document of the year as a number of key areas that could make a breakthrough in developing modern circulation industry.

The incentive policies that were granted to these areas quickly revived the whole industry that had been in a limbo for five consecutive years, Sun said.

Apart from the government's policy support, the local residents are getting richer also boosting up the consumption desire in circulation industry, he added.

The per capita GDP of Guangdong is forecast to surpass $3,500 during 2006-2010, implying that the residents will be capable of spending more, especially on services.

The provincial government forecast that the retail sales of the consumer goods would surge at an average growth rate of 12 percent each year to reach 1.4 trillion yuan ($178.8 billion) in 2010, which nearly doubled that of 2004.

By then, the retail sales of the consumer goods in five cities of the province are expected to exceed 100 billion yuan ($12.8 billion) annually and those of another 10 cities will exceed 50 billion yuan ($6.4 billion).

Chain operations will play a leading role in the circulation industry that would contribute at least 40 percent to the total retail sales of the consumer goods in 2010, the government predicted.

"We observe that in the developed countries, chain operation is the most prevailing style of the circulation industry. It is also a trend in Guangdong," Sun said.

At least 80 percent of shops that sell home electric appliances, automobile, telecommunications products and gas stations will have chain stores by 2010 while the percentage for shops that sell apparel and garment, watch and glasses and jeweleries will stand at 70 percent, according the government' medium-term plan.

In some mega-cities including Guangzhou and Shenzhen with more than 1 million population, the government forecast that at least 60 percent of the shops will have chain operations by 2010. Even in some villages and towns, the percentage of chain operations will stand at 30 percent.

According to the statistics from Guangdong Economy & Trade Commission, the total retail sales of consumer goods of Guangdong amounted to roughly 637 billion yuan ($81.4 billion) in 2004, which represented an increase of 13.6 percent from a year before and accounted for 11.8 percent of the country's total.

Some 6.3 million people are working for the circulation industry in 2004, or 13.5 percent of the total workforce of the province.

The industries of wholesaling, retailing, trade and catering realized about 137.9 billion yuan ($17.6 billion) added value in 2004, up by 10.6 percent from a year ago.

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