Click to read the original text for details Small shops contain great energy. Small shops, as the capillaries of the market economy, not only bring convenience to consumers but also drive the recovery and development of other industries, injecting energy into the social economy. With the release of the "Notice on Carrying out the Action to Promote the Small Shop Economy" (hereinafter referred to as the "Notice") by the Ministry of Commerce and six other departments on July 16, the "small shop economy" has ushered in historic development opportunities. The Notice proposes the development goal of "five years, one hundred cities, one hundred enabling enterprises, one thousand small shop clusters, and one hundred million small shops." At the same time, developing the small shop economy will also promote employment, expand consumption, enhance economic vitality, promote the formation of a multi-level and multi-category small shop economic development system, and meet the people's growing needs for a better life. -01- Goal: One Hundred Cities, One Thousand Clusters, One Hundred Million Shops Small shops have their own joys and sorrows. The small shops in Wangjing Xiyuan District 4 are equally bustling. Residents of the community are selecting daily necessities in convenience stores, a newly opened barbershop emits the rustling sound of hair dryers, and the owner of a dry cleaner's shop is busy carrying clothes in and out. This dry cleaner's shop has been open in the park for two years. The 20-square-meter shop has surprising storage capacity. At the entrance, there are vegetables and fruits; in the display area near the door, several rows of neatly arranged shoes; further inside, several large rotating clothing racks are hung with coats in dust bags; and further in, there is a simple small table with bowls and chopsticks on it, and a child sitting nearby reading a book. "The child comes to do homework after school, and we go home together when we close the shop," Cheng Xiaoyue told a Beijing Business Today reporter. This small shop is their home during the day, where they work and eat. The shop's services have also expanded from simple laundry to selling fruits and vegetables. This is what thousands of small shops across the country look like. Behind them are employment, consumption, and the hustle and bustle of daily life. They are the capillaries of the market economy. So, will this policy supporting the small shop economy benefit small shop owners like Cheng Xiaoyue? What exactly does "small shop" refer to in the small shop economy? The "National Small Shop Economy Development Guide" issued as an attachment to the Notice clarifies the connotation of small shops: Small shops are small-scale stores, mainly registered as individual industrial and commercial households and micro-enterprises. At the same time, which industries do small shops involve? According to the National Bureau of Statistics' "Statistical Classification of Large, Medium, Small and Micro Enterprises (2017)", small shops generally refer to individual industrial and commercial households in industries such as wholesale, retail, accommodation, catering, household services, laundry services, beauty and hairdressing, repair, photography and printing, and delivery services that serve resident consumption, as well as micro-enterprises with fewer than 10 employees or annual turnover below 1 million yuan, and online stores with annual turnover below 15 million yuan. The economic form based on small shops that promotes mass employment, improves people's livelihoods, and drives diversified consumption is called the small shop economy. On December 30, 2019, Premier Li Keqiang said at a State Council executive meeting: "We should use more targeted policies and measures to develop the 'small shop economy', create more employment opportunities, and promote the formation of a number of pedestrian streets with strong popularity, distinctive features, and cultural heritage." On June 1, 2020, during an inspection in Yantai, Shandong, Li Keqiang again stated that the small shop economy is an important source of jobs, the hustle and bustle of the human world, and, like "high-end and grand" businesses, is the vitality of China. Regarding specific development goals, the Notice proposes that by 2025, cultivate 100 pilot cities (districts) for the small shop economy, 100 enabling service enterprises, and form 1,000 small shop clusters with strong popularity and a rich "hustle and bustle" atmosphere, achieving the goal of "one hundred cities, one thousand clusters, and one hundred million shops." The small shop sector will become stronger, people's employment will be better guaranteed, and economic resilience and vitality will be further enhanced. According to public data, as of the end of 2019, there were over 80 million registered small shops nationwide, driving employment for about 200 million people. They are large in scale and number, absorb a lot of employment, have a wide industry distribution, and offer diverse services and business formats. Their clustered development has added market vitality and enriched the commercial culture. -02- Measures: Selecting Four Types of One Hundred Enabling Enterprises for Small Shops How to empower small shops is the key to developing the small shop economy. The approach of the Notice is to "let the big drive the small" and promote win-win development. The Notice requires using market-based means to promote "the big driving the small" and "the small promoting the big," so that large, medium, and small enterprises and individual industrial and commercial households can cooperate for win-win results and build an ecosystem together. The "big" in "the big driving the small" actually refers to the "100 enabling service enterprises" mentioned in the development goals. The "National Small Shop Economy Development Guide" specifically categorizes four types of enabling service enterprises: e-commerce service platforms, logistics service enterprises, commercial service enterprises, and central kitchens. The specific areas of empowerment are: e-commerce platforms provide small shops with digital services such as wholesale, advertising and marketing, mobile payment, data analysis, and software systems, and are encouraged to reduce thresholds and develop value-added services to reduce commissions and basic service fees, thereby reducing information costs and operating burdens for small shops; Logistics enterprises carry out supply chain services for small shops such as centralized warehousing, shared distribution, cold chain, and the recycling of pallets and turnover boxes, to reduce logistics costs; Commercial enterprises expand distribution business and provide small shops with empowerment services such as centralized procurement, wholesale, distribution, and technology; Central kitchens provide small shops with standardized services such as centralized procurement, unified processing, inspection and packaging, clean vegetables and semi-finished products, cold chain distribution, and the recycling of turnover boxes. In fact, e-commerce platforms and small shops have long been inseparable. Platforms launch various technical tools and support policies to support small shops, and the activity of small shops further enhances the platform's consumer appeal and richness. According to the "Alibaba Night Economy Report 2020" (hereinafter referred to as the "Report") released on July 16, on June 22, Alipay launched the "Luminous Collection Code." As of now, small shops that have switched to the "Luminous Collection Code" have seen a 30% increase in transaction activity. On the Jingxi platform, a Beijing Business Today reporter learned that on July 7, Jingxi launched the "Jingxi Industrial Belt Factory Direct Quality Products Plan - Graduate Small Shop Action," providing professional guidance, traffic support, and marketing and financial assistance for graduates to open online stores on Jingxi. According to the relevant person in charge, in terms of stocking, relying on the Jingxi Industrial Belt Factory Direct Quality Products Plan, small shops are provided with factory-direct supplies and high-quality goods originally for export but now sold domestically, breaking the difficulty of stocking, and through the "Hot Sales Trend Analysis Ranking," helping graduate shop owners stock intelligently. -03- Voices: The Small Shop Economy Catalyzes Economic Diversity The development of the small shop economy also faces problems such as high survival costs, difficult and expensive financing, and an business environment that needs optimization. Lai Yang, a special expert of the Beishang Research Institute and executive vice president of the Beijing Commercial Economics Society, said that there are many bottlenecks in the development of small shops, which cause them to pay a higher price in the process. On the one hand, most small shops have limited professional management capabilities; on the other hand, their ability to mobilize resources is limited; in addition, small shops have narrow channels to obtain funds, and the cost of obtaining funds is relatively high. In Lai Yang's view, the policy introduced this time has conducted quite in-depth research on the current difficulties faced by small shops. Whether it is the business environment, financial support, or relaxing entry barriers, it is basically targeted at the important bottlenecks in the survival and development of small shops. However, the implementation of the policy still has certain difficulties. To achieve better implementation results, relevant departments need to make more efforts. "The development of small shops, in the short term, increases competition, but in the long term, it attracts more practitioners to enter the commercial field, especially the community service sector. They ultimately lack systematic backend support and need more professional services, so we are optimistic about the promotion of convenience store development in the long run. As for absorbing small shops into more standardized and modern chain systems, this is a business direction we have always hoped to focus on. We will pay more attention to policy directions and market changes and follow up in a timely manner," said Tao Ye, general manager of Good Neighbor. "In fact, supporting the development of small shops will gradually lead to their differentiation and upgrading in the industrial ecosystem. That is to say, in an ecosystem, its vitality does not lie in the main trunk, but requires more diverse species to bring about the healthy growth of the ecosystem. At the same time, small shops can keep the entire market vibrant in the long run. Because the existence of small shops not only constantly stirs and upgrades the mature commercial system, but also plays a good role in enhancing and driving the overall economic vitality," Lai Yang believes that small shops are an indispensable business format in a city. Many famous retailers started from small shops and gradually developed, such as Walmart and JD.com. In recent years, the small shop economy has developed rapidly and plays an irreplaceable role in expanding employment, facilitating people's lives, and prospering the market economy. It has become an important part of the national economy and social development. Source: Beijing Business Today (ID: BBT_JLHD) Authors: Zhao Shuping, Guo Shihui, Liu Zhuolan, Zhao Chi, He Qian, Zhao Fangyuan