Center

New method takes effect to protect retail suppliers

(Xinhua)
Updated: 2006-11-16 16:29

It provides detailed rules on the charges retailers may impose and suppliers and prohibits retailers from demanding unreasonable withdraw of goods by suppliers.

Song Ze, researcher of the China Academy of Social Sciences, said that the contradiction between retailers and suppliers have existed for a long time.

"The deep-rooted cause is that foreign large retailers took lead to use their distribution and capital advantages to withhold their payment to suppliers, which hindered the latter's cash flow and eventually sour the relationship," said he.

A survey from the Ministry of Commerce revealed that payment default by retailers has actually evolved into an industrial practice. And domestic retailers do not stay clean. In some cases, payment of goods can be delayed five to six months behind the schedule.

In China, the world's largest market boasting of a population of 1.3 billion, a saying widely spread in the business circles is that who controls the distribution channels is the King.

There are quite a number of "Distribution Kings" in China, the US-based Walmart, France-based Carrefour, UK-based B&Q, Lotus Supermarkets from Thailand and local ones like Merrymart and Hualian.

A supplier said that it was right time to rectify their malpractice. Describing the method as "only a first move", he said that dethroning the Kings would be "difficult".

"If we reported offenses, who guaranteed the problematic retailers would be immediately punished and what are the other options to sell our products?" he asked.

Song Ze said the supplier's concern reflects the next move Chinese authorities must take - to tighten supervision and strengthen enforcement.

As five different departments are involved, he suggested officials of trade, public securities, taxation, pricing and industry and commerce establish a regular coordination mechanism to share information and launch joint crackdown on major transgression.

"Suppliers are not the only victims of the unfair trade - People working for suppliers, banks extending loans and shoppers having to pay higher prices for the extra costs that cash-strained producers refused to pay." Song said.