Distribution Reform and Retail Structure in China: An Empirical Analysis of Entries and Exits of Enterprises

This paper studies which aggregate socio‐economic factors determine the long run entry and exit process of the retail sector at the provincial level by using a data set of 30 provinces over eight years (1985–1992). The following results are obtained: (1) All predictor variables, especially population growth rate, average wage rate and employees per store, have statistically significant effects on the entry and exit process. Per capita national income, store per capita, average wage, mobility are significant in accounting for the variations in sales per store. (2) The 1988 austerity programme only affected the short run variable, sales per store but not the long run variable, store per capita. This suggests that the short run recession induced by the austerity programme could not affect the long term trend of the retail sector.