However, cut-throat competition among domestic and overseas players as well as more mergers and acquisitions will occur as well, said Di Jiankai, vice-director of the market department at the State Economic and Trade Commission.

Di made these predictions when addressing a high-level forum here yesterday on topical issues in the domestic commercial sector.

The forum is a prelude to the following three-day 2002 China Retail Conference, scheduled to begin today, the biggest-ever exhibition of more than 250 overseas and domestic companies in the retailing industry.

Official statistics indicate that China's consumer goods retail sales reached nearly 1,945 billion yuan (US$235.2 billion) over the first half of this year, posting 8.6 per cent growth compared with the same period of 2001.

While chain operations are expected to lead the future development of the domestic retailing sector, more retailing varieties, such as large supermarkets, convenience stores, shopping malls and fresh food supermarkets, will also appear, Di said.

Echoing rosy prospects in the retailing sector, the State Council will soon issue a policy package which aims to boost the development of chain operations through a string of preferential rules in terms of tax payments with an approved commodity range, said Di without providing more details.

According to the central government's plan, the total sales volume of domestic chain businesses are expected to reach 700 billion yuan (US$84.6 billion) by the end of 2005, posting 35 per cent annual growth and involving more than 100,000 outlets nationwide.

Di's commission is also working to draft a new regulation in a bid to better oversee the fast-growing commercial franchise operation in the domestic market.

(China Daily August 29, 2002)