Reform is to occur to monopolized Chinese salt industry
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The seemingly endless discussion on China's salt industry reform is once again entering a critical moment. The National Development and Reform Commission, the country's top economic planner, is taking the lead in drafting a reform plan, China Business News Daily learned Thursday.
An NDRC official said the plan's framework has been completed but details still need to be filled in. The NDRC expects to submit the proposal to the State Council for approval, noting that the end of China's salt industry's monopoly is imminent.
China Salt's senior official rebuffed rumors that the company opposed the reform, saying the open market competition wouldn't undermine the company and it wouldn't resist the reform. He said China Salt is already making the necessary preparations for the change in the way of they conduct business.
In an effort to popularize iodine salt, the central government once required cooking salt to include iodine. It also stipulated that the franchise be strictly limited to China Salt and its subsidiary companies in each province.
The franchise restriction led to China Salt's monopoly. Salt companies purchase crude salt from base producers at about 400 to 500 yuan (US$58.56 to US$73.20) per ton, while iodine is about 20 to 25 yuan (US$2.93 to 3.66) per ton. But the wholesale price jumps to 1,500 to 2,000 yuan (US$219.62 to 290.83) per ton.
"The huge profit is obvious," said an assistant research fellow with the Chinese Academy of Social Sciences.
The NDRC official noted that salt in China isn't a rare resource and is in mature condition to go off strict franchise, and that breaking the monopoly and loosening the franchise is a long term tendency. To balance various interests, the reform will be carried out in several steps.
Last month, 28 salt manufacturers convened in Nanchang about the industry's reform. They produced a report, "Advice on Salt Industry's Reform," and submitted it to the NDRC and Ministry of Industry and Information Technology for review.
"The gradual loosening of the franchise is an irreversible trend, and China Salt has been gearing up for it," said a senior official with China Salt. "We have already given instructions to our subsidiaries to get prepared for a full scale market completion."
The official did not deny that the reform will dampen the company's profit to a certain extent.
Easier accessibility to salt franchise will be good news to most salt producers because they will be able to directly compete with each other and face consumers.
