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¹Centre for Chinese Studies, School of East Asian Studies, Floor 5, Arts Tower, University of Sheffield Western Bank, Sheffield, S10 2TN, UK. E-mail: R.I.D.Taylor@sheffield.ac.uk

The Chinese leaders have stated that domestic consumption is the key to China's further economic development. An examination of consumer trends since the initiation of China's open-door policy in 1978 suggests market segmentation based on growing personal and regional income inequalities. There is also greater quality discernment as markets mature. Furthermore, credit provision is designed to stimulate consumption. It is argued that consumption will additionally be spurred by ongoing reform in the distribution system. Under the command economy, wholesale and retail services were a state monopoly, and this legacy has impeded the development of a nationwide market. Foreign companies have been playing a major role in the transformation of China's distribution system. Thus, companies like Walmart and Daiei, active in supermarket chains, introduce high levels of service, the use of information technologies in selling and marketing, and scientific management. In response, Chinese domestic concerns need to institute economies of scale and greater integration between supply and retail networks. Finally, membership of the World Trade Organisation (WTO) will force China's leaders to open the country's service sector to foreign investors. In conclusion, WTO membership will provide impetus towards greater competitiveness in China's distribution system, thereby facilitating expansion of consumer markets.

Asian Business & Management (2003) 2, 187-204. doi:10.1057/palgrave.abm.9200041

consumer demand; distribution reform; wholesale; retail