Since the retail sector fully opened to foreign companies in 2005, the sector has become a battlefield for domestic and foreign companies, Sohu News reported.   Since national enterprises are no longer protected by the government, foreign enterprises accelerate their business expansion plans using their advanced management techniques, high service level, products and capital to establish extensive retail franchises across the country, and also acquire domestic retail outlets to obtain bigger shares of the market.   Apart from tobacco, salt, newspapers, magazines, pharmaceutical products, chemical fertilizers and crude oil, China now allows foreign enterprises to establish wholesaling and retailing joint ventures with domestic companies. Restrictions over shareholder structure, etc, are gradually being lifted.   Development pattern of foreign enterprises In 2005, the Ministry of Commerce licensed 1,027 companies to open 1,660 outlets with investment capital totaling 18.16 million yuan.   Retail franchises such as Carrefour and Walmart not only have established clear image with which consumers are familiar with but also generated impressive sales and returns.   As the regulations over shareholder structure of venture and acquisitions are lifted, foreign enterprises find it easier to enter the Chinese market. As foreign retailers start to expand their networks to secondary cities in central, northern and southern China, they start to obtain a larger customer base and more retail outlets through accelerated strategic accelerations. Their operations strive to become more localized with Chinese-speaking staff, management, and products.   From retailing, foreign enterprises plan to expand into the wholesaling and logistics sectors by establishing large-scale purchasing centres for regional distribution and providing storage as well as logistics services.   In such big cities as Beijing, Shanghai, Nanjng, Guangzhou and Shenzhen, multinational retailers have succeeded in pulling large numbers of customers from local retailers. Many commercial districts need to have the presence of foreign retailers to increase attractiveness to local residents. According to the president of China Chain Store and Franchise Association, Guo Geping, foreign enterprises have grown more rapidly than domestic retailers and the profit of half of the domestic retailers across the country have fallen in the past two years.   According to the statistics of the China National Commercial Information centre, among 400 supermarkets owned by 42 foreign retailers, each sq. meter generates on average 20,600 yuan which is higher than domestic enterprises’ 14,000 yuan.   Wei Jie, a professor with the school of economics management at Tsinghua University, said that on the one hand, the increased competition brought by foreign players can accelerate domestic corporate reform. Domestic retailers have to raise their own efficiency, quality and varieties of products, and management and operation systems. Since multinationals enjoy the competitive edge of low-cost but high quality products provided at high efficiency, it is difficult for domestic retailers to compete.   An expert with the Development Research Institute of the State Council pointed out that retailing is an important phase of the supply chain, which has the power to direct consumption and production. The overwhelming control of the retail market by foreign enterprises reduces domestic retailers’ profit and market share and also impacts the country’s production and consumption trends.   How domestic enterprises position in the market Chinese retailers have enjoyd continuous growth in profitability and operational efficiency. According to the statistics released by the Ministry of Commerce in 2005, the top 30 domestic retail franchises have an 18.8 percent growth rate in sales and a 21.8 percent growth in the number of outlets in 2004.   Wang Hai, an official with the Ministry of Commerce, said the government still offers incentives to Chinese retailers to help them to meet international standards. Shanghai Bailian, Wang Fujing Department stores, Suguo, Dalian Dashang and Wuhan Zhongnan Commercial Group are included on this list.   Parallel competition and cooperation Analysts said that the reality is that commercial conflicts would be compromised in the future. Cooperation and competition would are likely for both Chinese and foreign retailers.   Chinese retailers suffer from problems such as singular sales strategies, lack of brand building, poor human resources, and backward operations management.  Foreign retailers suffer from a lack of local understanding and knowledge especially in secondary locations and markets. Their localization takes a much longer time to be completed. All these pave the way for possible future cooperation. Whether corporate development can be sustainable would depend much on operation and management level.   Experts estimated that from 2005 to 2010, the Chinese retail sector would maintain a 8 to 10 percent growth rate. Disciplined competition and cooperation would direct domestic retailers to healthy and sustainable development and reform.