Six months have passed since the salt reform plan was introduced in January this year. Although there are still obstacles in various provinces and regions that interfere with the entry of external salt, several provinces and municipalities, including Jiangxi and Chongqing, have successively abolished their salt administration bureaus, which is the greatest support for the salt reform policy. Breaking the past arbitrary practice of acting as both player and referee, the freedom of salt production and sales has been further liberalized.

Multiple Provinces Abolish Salt Administration Bureaus

It is understood that one important clause in the salt reform plan requires each province and municipality to separate government and enterprise functions among the salt industry supervisory authority, salt safety regulatory authority, and salt companies. The reform requires the abolition of city and county (district) salt administration bureaus, stripping their administrative functions. The salt industry supervisory functions are to be transferred to the industry and information technology departments, while salt quality safety management and supervision functions are to be transferred to the food and drug regulatory departments. The plan specifies that the provincial industry and information technology commission is the provincial salt industry supervisory authority, and the industry and information technology departments at or above the county level are the local salt industry supervisory authorities.

According to a review by reporters, since the beginning of this year, Jiangxi, Inner Mongolia, Chongqing, Sichuan, and others have successively proposed opinions on abolishing the salt administration bureaus.

The Jiangxi provincial government requires that the "Jiangxi Province Salt Industry System Reform Involving Institutional and Staffing Adjustment Plan" be issued before the end of March this year. The Provincial Human Resources and Social Security Department will study and formulate the "Jiangxi Province Salt Industry System Reform Involving Regulatory Personnel Placement Measures" to legally and compliantly resolve the identity conversion of salt industry law enforcement personnel at all levels. According to the plan, the work plans for salt industry system reform in each districted city must be completed by the end of March 2017, and those for each county (city, district) must be completed by the end of June 2017.

In addition, on June 12, Sichuan Province issued the "Sichuan Province Salt Industry Regulatory System Reform Plan," proposing to divert the various functions undertaken by the former Provincial Salt Administration Bureau to departments such as the Provincial Economic and Information Commission and the Provincial Food and Drug Administration, and to reassign existing law enforcement personnel. After the adjustment, Sichuan will retain the "brand" of the Provincial Salt Administration Bureau, which will be listed under the Provincial Economic and Information Commission. Existing law enforcement personnel will be reassigned through methods such as "recruitment through examination, leaving posts pending retirement, training for job transfer, and negotiated contract termination."

Meanwhile, both Inner Mongolia and Chongqing, as provincial-level administrative regions, have proposed abolishing the salt administration bureaus and transferring management functions to the industry and information technology departments, economic and information technology departments, and food and drug regulatory departments.

H1: Cross-Regional Operations Frequently Hindered

On one hand, some provinces and cities have implemented plans to abolish the salt administration bureaus; on the other hand, some provincial salt administration bureaus have set up trade barriers against external salt enterprises. National ministries have been accepting complaints, but such barrier-setting obstructions have never ceased.

According to the "Salt Industry System Reform Plan" implemented from January this year, the restrictions on salt production and sales regions have been lifted.

The regulatory rules within the salt industry are strict and numerous. For salt production and wholesale companies that have long been within the system, familiar with industry regulation, the expansion of business regions seems simple, but various thorny issues have arisen.

Local salt administration bureaus and local salt enterprises often have intertwined interests. In the view of industry insiders, when the salt administration bureau inspects external salt enterprises, it is essentially checking on peers who have stepped into their own territory.

Based on this exclusionary mentality, news of local salt administration bureaus setting trade barriers has been reported across provinces and cities this year. In addition to directly seizing competitors' goods under the guise of regulation, some have gone further by prohibiting retailers from selling external salt. For example, in Xiangcheng, Henan, it was exposed in March that the local salt administration bureau purchased external salt, repackaged it, and sold it, while prohibiting other supermarkets and individual operators in the city from selling legally sold external salt.

Furthermore, salt administration bureaus and cross-regional salt enterprises have even taken each other to court. On April 28 this year, the case of China Salt Shanghai suing the Jiangsu Provincial Salt Administration Bureau was heard in the Nanjing Intermediate People's Court. The plaintiff, China Salt Shanghai, had previously issued a statement on its official website stating that the Jiangsu Provincial Salt Administration Bureau listed the enterprise as one selling unqualified salt products or products not meeting national standards, which is "using the name of food safety to practice local protectionism, violating the spirit of the salt industry system reform plan."

Regarding the above situation, Zou Jialai, a salt industry lawyer who has followed the salt reform for many years, stated that from the implementation plans of various regions, after the abolition of the salt administration bureaus, most regions have adopted the model of "personnel following functions," which may lead to a situation where the "brand" of the salt administration bureau is gone, but officials retain management authority, potentially resulting in the salt administration bureau being "nominally abolished but actually existing."

"In response to these problems, the National Development and Reform Commission (NDRC) and the Ministry of Industry and Information Technology (MIIT), together with relevant departments, conducted special research in local areas. On this basis, they jointly issued the 'Notice on Further Implementing the Work Related to the Salt Industry System Reform,' requiring all provinces, autonomous regions, and municipalities to carry out special actions to implement the cross-regional operation policy of the salt reform, with the special actions required to be completed by June 30 this year," said a relevant NDRC official.

Merger Wave May Come, Competition Will Intensify

Under this round of reform, the actions of the central enterprise giant China Salt Corporation have attracted much attention. Although it has rarely responded to the salt reform plan, China Salt has actually been laying out its strategy for a long time. As early as 2014, China Salt's Shanghai Salt Company reached a cooperation intention with Morton Salt, the largest salt company in the United States, and jointly established Shanghai China Salt Morton Salt Company, controlled by China Salt Shanghai Salt Company, to expand China's high-end salt market. In 2015, it launched four products: Morton iodized salt, non-iodized salt, iodized sea salt, and non-iodized sea salt, in addition to distributing original imported Morton products. This move is seen as a response to the upcoming market competition in salt.

Industry insiders believe that for salt enterprises, actively engaging in market competition and being fully prepared to "enter the market" are necessary strategies under the current situation. How to seize opportunities while strengthening internal capabilities is a question every salt enterprise must carefully consider.

Before the salt industry system reform, due to administrative monopoly, the market was fragmented and unable to form a unified national market, resulting in excessive circulation links and low operational efficiency across the industry. It is reported that besides China Salt, provincial salt enterprises are currently formulating reform plans.

After half a year of running-in, the resistance of the salt administration bureaus will be greatly weakened. To survive, salt factories will have to make comprehensive deployments in both offense and defense, and the "price war" may further escalate.

In the Fuzhou market, the 350-gram iodized raw salt, which was once low-priced and most commonly purchased by citizens, originally retailed at 2 yuan per bag, but now more lower-priced products have appeared. For example, a Guangdong-produced iodized sea salt, 400 grams, sells for only 1.5 yuan, 30% cheaper than similar products originally sold in Fuzhou; a Yunnan-produced 500-gram well salt is even cheaper, selling for only 1 yuan per bag.

At the same time, favorable policies in various provinces are gradually being realized. For example, in the list of salt business enterprises published by the Gansu Provincial Industry and Information Technology Commission, 122 enterprises were approved to enter the market. Compared to the public list on April 19, four more were added.

Moreover, in recent days, reports of "salt being seized" have decreased, and the "smelly foot salt" incident has gradually subsided. However, in different supermarkets, promotional activities by various brands, to a certain extent, represent the intensity of the fierce competition among salt enterprises. Perhaps, in the second half of the year, a "dragon-tiger fight" in the salt market is about to unfold!

Source: Grain, Oil, and Seasoning Marketing

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