Big role for professional companies
By Zhang Jin (China Daily)
Updated: 2004-04-01 09:07

Despite concerns over shrinking living space due to the further opening up of trade sector, China's professional trading companies, mostly State-owned enterprises (SOEs), will continue to play a big role in the trading sector.

Their brands, personnel resources, and trading networks will help them remain successful, analysts say.

"International trading is no longer a refuge for us big SOEs," said Wang Wenhai, a manager of National Metals and Minerals Corp, the country's biggest metal trader, "More and more overseas and domestic players have been attracted to this market because of the lifting of bans."

All enterprises in China, including foreign-owned subsidiaries, will have trading rights in 2005.

Under the deregulation, many companies will establish their own trading arms which will reduce their reliability on trading firms.

In addition, proposed amendments to the nation's decade-old Foreign Trade Law will grant import-export rights to individuals.

However, traditional trading companies are able to concentrate on their businesses, as they have unique and irreplaceable resources, even when most are making headway into other industries.

"Their international reputations and good credit will help them remain influential in the trade sector," said trade expert Fan Ying.

"These are very valuable resources that can only be nurtured through years of development," she said.

"A number of newly established trading companies don't have such advantages," Fan added.

Zhang Hanlin, director of the China Centre for WTO Studies, also believes the opening of the trade sector will not put professional trading firms out of business.

"Not every newcomer is familiar with the market," he said, "pure traders still have chances to consolidate their foothold."

Many private businesses are still willing to entrust professional trading companies with import and export transactions, just as he predicted.

Wang Xiang, president of the private firm Jiujiang Minsheng Foodstuff Group, said trading canned bamboo shoots is mainly conducted through State-owned professional trading companies, although his company is certified for foreign trade.

"These professional companies have traditions in the trading field and are internationally recognized," Wang explained.

Realizing their advantages, these trading titans are revving up efforts to expand their trading network, to remain or even enhance their ability to meet fiercer competition.

"We are determined to establish a more penetrating national trading grid," Wang Wenhai told China Daily, "we will not give up our expertise and resources in the metal trading field that has taken nearly 50 years to mature."