Blocking warehouses with farm vehicles, blocking supermarkets with trucks, slitting open bagged salt with scissors, and assaulting company employees... In the six months since the salt reform "transition" period began, a series of bizarre scenes have further exposed the interest obstruction behind them.
Recently, multiple salt enterprises provided reporters with video, audio, and documentary evidence, reflecting that after entering the salt reform transition period in 2017, incidents of blocking cross-regional sales have occurred in many places.
Industry insiders believe that these incidents themselves reflect the interest structure behind them and are also the biggest resistance to the entire salt industry reform.
According to the State Council's "Salt Industry System Reform Plan" (hereinafter referred to as the "Plan"), the Plan was officially implemented from January 1, 2017. Among them, January 1, 2017 to December 31, 2018 is the salt reform transition period. In addition, according to documents from the National Development and Reform Commission and the Ministry of Industry and Information Technology, if the provincial, municipal, and county-level salt industry supervisory agencies and salt companies have not been separated, a salt industry regulatory system reform plan must be completed by June 30, 2017, and separation of government from enterprises (or public institutions) must be achieved by the end of 2017.
"I think this is a counterattack by vested interest groups, trying to buy time for local enterprises through such blocking actions and further consolidate their territory," said a management person from a salt enterprise.
Frequent Obstruction of Cross-Regional Operations
According to the State Council's salt reform plan, the reform focuses on four key points: First, reform the regional restrictions on salt production and wholesale. Allow production enterprises to enter the circulation and sales field and conduct cross-regional operations. Second, reform the government pricing mechanism for salt. Liberalize ex-factory, wholesale, and retail prices of salt, allowing enterprises to independently determine prices based on factors such as production and operating costs, salt quality, and market supply and demand. Third, reform the management of industrial salt transportation and sales. Liberalize the market and prices for small industrial salt and salt products. Fourth, reform the salt reserve system. Establish a social salt reserve system composed of government reserves and corporate social responsibility reserves.
The Plan clearly states that from January 1, 2017, all salt product prices will be liberalized, the salt transport permit will be cancelled, existing designated salt production enterprises will be allowed to enter the circulation and sales field, salt wholesale enterprises can conduct cross-regional operations, and provincial-level and below salt wholesale enterprises can operate independently across regions within their own province (autonomous region, municipality).
However, reporters learned that in the six months since the salt reform transition period, there have been incidents of cross-regional operations being obstructed, with large quantities of out-of-province salt being seized, sealed, and removed from shelves by local salt affairs bureaus.
The Shanghai person in charge of Hubei Guangyan Lantian Salt Chemical Co., Ltd. told reporters that according to incomplete statistics, so far, Hubei Guangyan's salt products have been inspected 157 times in Jiangsu, with nearly 600 tons of salt seized. This mainly targets retail stores, with the reason being violation of Article 10 of the "Salt Monopoly Management Measures," which stipulates that the state implements a wholesale license system for salt wholesale. And Article 14, which stipulates that salt retail units, individual industrial and commercial households entrusted to sell salt on behalf of others, purchasing and selling agencies, and units using salt for food processing should purchase salt from local enterprises that have obtained salt wholesale licenses. Jiangsu's local salt affairs bureaus have adopted measures such as registering and preserving the salt first, or even confiscating or fining. For those "suspected of illegal operations," the grassroots salt affairs bureaus in Jiangsu do not explain any reasons, only letting salt enterprise staff view relevant documents.
Reporters verified that since the Plan was officially implemented, in multiple provinces such as Henan, Anhui, Jiangsu, and Guizhou, there have been actions to seize out-of-province salt flowing into local markets, with the basic reason being "suspected illegal operations," based on the "Salt Monopoly Management Measures."
But the Plan clearly stipulates that designated salt production enterprises can hold the salt wholesale license issued by the provincial (autonomous region, municipality) salt industry supervisory agency (valid until December 31, 2018) to enter the salt circulation and sales field and operate independently across provinces (autonomous regions, municipalities).
"Since January 2017, the salt affairs administration bureaus in many places in Jiangsu Province have launched investigations against retail, supermarket, and logistics merchants cooperating with China Salt Shanghai under the names of 'suspected illegal purchase of salt,' 'selling unqualified salt,' and 'illegal wholesale of salt,' and have registered and preserved (seized) small-packaged salt. According to Article 37 of the 'Administrative Penalty Law of the People's Republic of China,' 'a decision on handling should be made within seven days after registration and preservation.' However, to this day, the seized salt products have still not been handled according to law," a staff member of China Salt Shanghai told reporters.
Regarding salt quality testing requirements, Document No. 604 of the Development and Reform Office [2017] clearly stipulates that relevant departments must not seize or confiscate salt products that legally enter the market on the grounds of testing salt quality, nor affect normal sales of enterprises; if testing is truly necessary, salt quality should be tested in the form of spot checks, and testing should be entrusted to qualified salt testing institutions based on relevant national and industry standards for salt, or based on effective enterprise standards; enterprise standards should be stricter than national and industry standards, and should be filed with the local food safety standards competent department, and also reported to the National Salt Industry Standardization Technical Committee, which should publish them on relevant websites. Professional salt testing institutions should issue written notices when entrusted by relevant departments for spot checks, and the test results should be notified to enterprises in writing.
Salt Affairs Bureaus Accused of Expanding Enforcement Scope
Since the implementation of the salt reform, designated salt production enterprises have been allowed to hold salt wholesale licenses for cross-regional operations. Market entities have become diversified, product varieties have shown diversity, and salt prices have remained basically stable, but with a slight decline. According to data from the Price Monitoring Center of the National Development and Reform Commission, the national edible salt supply on shelves is sufficient and varieties are rich.
Reporters learned that while the salt reform has achieved results, it has also spawned new problems. Traditional salt wholesale enterprises have seen a sharp decline in benefits, and some enterprises even face survival difficulties. The reason is that the reform has shifted the salt industry from a monopoly stage to a competitive stage, breaking the original monopoly pattern and causing a significant drop in salt prices. Facing fierce market competition, benefits have declined sharply, leading to survival difficulties for some enterprises.
During the salt reform transition period, salt wholesale enterprises (including designated salt production enterprises that have obtained salt wholesale licenses) can conduct salt sales operations through self-built logistics systems or by signing distribution contracts with third-party logistics companies to distribute salt to supermarkets, sales outlets, and salt end users such as food processing and catering service units; self-built branch companies for salt sales business, but self-built branch companies must not entrust units or individuals without salt wholesale licenses to conduct business activities; self-built sales outlets to directly conduct salt sales business; and through existing channels to conduct salt sales business.
According to the "Notice on Doing a Good Job in the Work Related to Designated Salt Production Enterprises Entering the Salt Circulation and Sales Field and Salt Wholesale Enterprises Conducting Cross-Regional Operations during the Reform Transition Period" (No. 585 of the Ministry of Industry and Information Technology and the National Development and Reform Commission), to facilitate relevant departments in performing regulatory duties, salt wholesale enterprises should proactively inform the provincial salt industry supervisory agency of the sales location of 8 items of information when conducting cross-regional operations. The provincial salt industry supervisory agency should publish the 8 items of information on its official website within 3 working days of receiving the notification, and must not refuse to publish for any reason.
The main information that provincial-level salt wholesale enterprises should inform when conducting cross-regional operations includes: enterprise name; enterprise registered address; enterprise production and operation address; legal representative or person in charge and contact information; enterprise contact person and contact information; enterprise business license registration number/unified social credit code; salt wholesale license number; and the salt varieties sold by the enterprise and the standards they are based on (national standards, industry standards), totaling 8 items.
However, reporters learned that the salt safety inspection checklist for supermarkets issued by the grassroots salt affairs bureau in Jiangsu shows that in addition to the 8 items that should be informed, supermarkets also need to provide supply agreements signed with each cross-regional salt supplier; logistics distribution information for each supplier (if entrusted to third-party logistics, the qualifications of the third-party logistics company and the distribution agreement signed between the supplier and the logistics company); certificates and quality inspection reports for each cross-regional salt product currently on sale or about to be sold; invoices for each cross-regional salt product on sale; and management systems related to supermarket salt product safety self-inspection, invoice and certificate collection, sales records, logistics management, and recall of unqualified salt.
Document No. 58 of the Ministry of Industry and Information Technology clearly stipulates that provincial and below salt industry supervisory agencies must not treat the notification of cross-regional salt operation information as an administrative approval item, must not add notification items, must not expand the scope of notification, and must not increase the frequency of notification.
On June 16, the Jiangsu Provincial Salt Affairs Administration replied to this newspaper, saying that regarding the issue of the 8 items of information, "after investigation, no situation of grassroots units arbitrarily expanding and increasing notification information was found." It also said: "After verification by our bureau, no situation of grassroots units prohibiting the entry of out-of-province salt was found, and there were no acts such as blocking warehouse doors or injuring salt enterprise staff."
Escalating Conflict Between Salt Enterprises and Salt Affairs Bureaus
The statement from China Salt Shanghai Salt Industry Company said: "The Jiangsu Provincial Salt Affairs Administration, without obtaining any evidence, has used internal notices to carry out administrative penalties; and has used the name of food safety to carry out local protectionism. This not only violates the spirit of the Party Central Committee and the State Council's salt industry system reform plan, but also damages the just image of administrative law enforcement departments."
On June 15, the Lianshui Salt Affairs Bureau in Huai'an City, Jiangsu Province, required local Suguo supermarkets to remove out-of-province salt from shelves, including China Salt, Haixing, Yiyantang, and Suote. "Usually, salt affairs bureau staff inspect stores, and once they find out-of-province salt on the shelves, salt administration law enforcement personnel immediately require it to be removed. Any foreign salt will be forcibly removed without reason. On the second day after it was put on the shelves, the Lianshui Salt Affairs Bureau required it to be removed on the grounds of incomplete materials. After we submitted all materials, the response from the salt affairs bureau law enforcement personnel was to wait for notification," said Mr. Yu from China Salt Shanghai.
According to reporters, the law enforcement of a certain provincial grassroots salt affairs bureau has been quite controversial. For example, the salt affairs bureau of a certain city in that province used an Anhui-plated farm vehicle to block the warehouse door of Hubei Guangyan Lantian Salt Industry Company; the salt affairs bureau of a certain county used a truck to block the entrance of a supermarket; a certain salt affairs bureau intercepted logistics distribution vehicles; law enforcement personnel of a certain salt affairs bureau privately destroyed out-of-province salt products, using scissors to cut open all the salt from Hubei Guangyan Lantian in retail stores, saying that this salt could not be sold, but without giving a reason; law enforcement personnel of a certain provincial capital salt affairs bureau injured employees, and finally settled privately in a personal capacity...
"In a certain city, there was a case where the local salt affairs bureau registered and preserved the salt and then transferred it to the public security. After investigation, the public security dismissed the case because the circumstances were minor, the harm was not great, and it was not considered a suspected illegal business operation. But the local salt affairs bureau still did not return our salt," the person in charge of Guangyan Lantian told reporters.
From January to the end of April and early May, China Salt Haolong shipped a total of 31,000 tons of salt. So far, more than 20,000 tons have been seized, of which more than 4,000 tons are held by various local salt affairs bureaus. Some are in custody, and the rest are sealed and stored at customers' premises, not daring to sell.
The Yongzhou Public Security Bureau in Hunan arrested 3 business personnel of China Salt Haolong on charges of illegal business operations and submitted the case to the procuratorate. The 3 business personnel had signed labor agreements with China Salt Haolong, which included insurance. Similar cases have occurred, and to date, China Salt Haolong has 25 such cases.
"Our feeling is that out-of-province salt is not allowed in, infringing on their interests, and they seize, seal, and remove from shelves on grounds of unqualified quality or other flaws. Since the salt reform, there has been chaos, a kind of local protectionism. Enterprises are a vulnerable group, and as an enterprise, we simply cannot bear it. With more than 2,000 employees, our survival is very difficult," the person in charge of China Salt Haolong told reporters.
The Final Battle of Interests?
In some provinces, the salt affairs administration bureau and the salt company are two signs but one team. The general manager of the salt company also serves as the director of the salt affairs bureau, acting as both athlete and referee. Facing the influx of out-of-province salt, it is bound to affect the interests of the salt company. Therefore, they have set up layers of obstacles for out-of-province salt entering the local market. Thus, the separation of government from enterprises seems to be a key step in implementing the salt reform. At the same time, the salt affairs bureau enforces the law based on the "Salt Monopoly Management Measures."
According to documents from the National Development and Reform Commission and the Ministry of Industry and Information Technology, if the provincial, municipal, and county-level salt industry supervisory agencies or salt quality safety management and supervision agencies have not been separated from salt companies, a salt industry regulatory system reform plan must be completed by June 30, 2017, and separation of government from enterprises (or public institutions) must be achieved by the end of 2017.
Why has cross-regional operation been frequently obstructed since the salt reform? Professor Wang Keshan from Beijing Wuzi University told reporters that the salt reform's cancellation of regional restrictions on salt production and sales means a change in the market structure. Cross-regional operation inevitably leads to a redistribution of the original cake. New entrants come for profit, and original market holders defend for profit, so conflicts are inevitable. Policy formulation should be orderly and easy to understand and operate, avoiding vague conflicts; otherwise, market entities will act according to their own understanding, and regulators will find it difficult to grasp the scale.
"The main problems with cross-regional operation obstruction are: the lack of separation of government and enterprises leads to non-standard business behavior; the system design of separating production and sales creates conflicts of interest between production and sales; salt production enterprises cannot directly enter the market, lacking enthusiasm for independent innovation; and regional segmentation in operations leads to low efficiency," Professor Wang said.
Zhao Ligen, deputy director of the Research Office of China Salt Corporation, recently said in an interview with this newspaper that since China implemented the salt monopoly system in the 1990s, it has played an important role in ensuring the supply of qualified iodized salt in the market, eliminating iodine deficiency disorders, stabilizing salt prices, and responding to emergencies and natural disasters.
However, while achieving results, the monopoly system has also spawned many problems, such as market regional segmentation and low operational efficiency; prominent contradictions between production and sales, with salt production enterprises lacking their own brands and unable to sell salt on the market; and problems such as the lack of separation of government and enterprises and the expansion of monopoly. These problems have resulted in insufficient market vitality in the entire salt industry.
Regarding some problems that have arisen during the salt reform, the main reasons are that the revision of salt industry regulations has not yet been completed, the standards for salt administration law enforcement vary across regions, and deviations in understanding the reform plan are inevitable; some provinces have not yet implemented the separation of government and enterprises, and some monopoly enterprises are not yet adapted to the transformation of the old and new systems, treating traditional sales areas as their own territory and not tolerating others 'moving their cheese'; and a few designated salt production enterprises also have non-standard problems in cross-provincial operations. These problems, with the deepening of reform, the implementation of government-enterprise separation, the revision and improvement of relevant regulations, and the introduction of supporting rules, are believed to be well resolved.
Source: China Business Journal (ID: chinabusinessjournal)
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