Society

WHOLESALE CHANGE

Beijing’s second Covid-19 outbreak has sparked calls for long-overdue reforms and upgrades to its epicenter - the massive Xinfadi produce wholesale market - and the way similar markets operate from now on

By Xie Ying , Huo Siyi Updated Sept.1

Guards are posted at the entrance to Beijing’s Xinfadi wholesale market after cases of Covid-19 were detected, June 13

Beijing has reported over 300 confirmed coronavirus cases since a 52-year-old man visited a hospital with a fever and tested positive for Covid-19 on June 11. An investigation showed that most cases in this second wave had either visited or worked at the city’s Xinfadi market, one of Asia’s largest farm produce wholesale markets. After researchers detected the virus in samples collected from Xinfadi, authorities shut it down. 　

Although DNA analysis suggests the virus was not local and may have arrived with imported frozen foods or a person from outside the city, Xinfadi’s overcrowding was blamed for the fast spread. 　

“The market was always packed with people. Social distancing had been done away with long before and many of the people there had even taken off their face masks,” Wang Ying (pseudonym), a woman who lives near the market, told NewsChina. According to Wang, hercommunity has seen at least five confirmed coronavirus cases. 　

As authorities locked down neighboring communities and destroyed piles of produce to prevent further infections, Xinfadi’s future remained uncertain. “Xinfadi’s operation and management were outdated. The latest epidemic has drawn concerns from operators and the government to the market’s problems and called for upgrades and reform,” Dai Zhongjiu, executive director of China Vegetable Marketing Association, told NewsChina. 　

‘The Big Maze’

What started in 1988 by 15 rural workers from Xinfadi Village, the market now covers 112 hectares and has 18 gates, its labyrinthine corridors earning it the name “The Big Maze” among locals. Although the market complex has seen renovations since 2010, such as paved roads and additional buildings, until recently Xinfadi still operated the same way it has for decades - bustling with buyers, sellers and trucks starting at 1 am daily. 　

According to a Beijing News report, Xinfadi had over 5,500 produce stalls selling vegetables, fruits, seafood, pork, beef and mutton to over 8,000 regular customers from around the country. In 2019, Xinfadi saw 17.5 million tons of produce, ranking it first in trade volume among the more than 4,600 agricultural wholesale markets nationwide for 17 years straight. Around 60,000 people and 30,000 trucks visited the market every day. 　

“Xinfadi’s products are traded on-site and in cash, so people deliver and pick up produce with trucks. This basic trade means frequent contact between people,” Dai said. 　

According to Dai, auctions are better for wholesale markets. While visiting a market in Japan in the 1990s, Dai witnessed that auctions did away with on-site loading and unloading, making the process more orderly and efficient. There are only a few dozen certified wholesalers in each market. Transactions were transparent and conducted quickly.　

Yet, Dai said the Chinese mainland is unprepared to conduct produce auctions. “A fundamental part of auctions is uniform production, but agriculture in China is scattered and covers a wide range... Chinese farmers, for example, could not supply only one or two varieties of tomatoes in unified packaging like farmers in Japan and South Korea do,” he explained.　

Shenzhen was the first city on the mainland to hold wholesale auctions at a local market in 1997, but trade volume remained low, and the market suffered. Cities like Shouguang in Shandong Province, Guangzhou in Guangdong Province, Dounan in Yunnan Province, and Beijing also held auctions at their flower markets with minor success. 　

To boost efficiency, most wholesale centers on the mainland had adopted spot market trading by 2010. However, it failed to catch on. Experts blamed China’s low intensive agricultural production. According to data from Xinfadi, electronic trading made up only 9 percent of total sales volume in 2014.　

Most wholesale markets also deal in retail, which significantly increases traffic. Though Asia’s largest wholesale market, Xinfadi was the primary source of produce for average Beijingers, many of who were local elderly residents doing their daily shopping. 　

Official data showed that in the latest wave of coronavirus, many of the confirmed cases, including the first one, had grocery shopped at the Xinfadi market. 　

“I noticed that wholesale markets did not differ from retail wet markets. I don’t think big crowds are what wholesale markets should pursue. Actually, it’s a sign of low efficiency... We have to separate retail from wholesale as soon as possible to reduce traffic flow and increase truck rotation,” An Yufa, a professor at China Agricultural University, said in a report published on the Central Commission for Discipline Inspection website on June 17. 　

“As people have increasingly higher expectations for living standards and environment, we cannot allow wholesale markets to remain the same as they were 20-30 years ago,” he added. 　

Community staff wait at the entrance of Lingdang Hutong, Dongcheng District, Beijing on June 21, soon after communities started to enforce temperature tests, health code checks and registration procedures after a second Covid-19 outbreak

Dancers socially distance at a dance studio which stayed open in Beijing, June 20. Most people stayed home following the second coronavirus outbreak in the capital

Rural Collectives

According to An, the Covid-19 outbreak at the Xinfadi market exposed China’s lack of infrastructure for distribution of agricultural products that includes storage, quarantine inspection and refuse disposal. 　

Most samples from Xinfadi that tested positive for the coronavirus came from seafood and meats. Without a tracking system in place, however, locating their origins proved difficult.

“One of the urgent problems we need to address is creating an effective tracking system,” An said. 　

Yet, operators are facing challenges to upgrade and modernize their markets. According to a 2012 book by Xinfadi’s president Zhang Yuxi, management had been dipping into Xinfadi’s annual profits to conduct piecemeal renovations. Zhang wrote he began appealing to the Fengtai District government for financial support in 2009. 　

Just 10 days before the latest outbreak, an official from the Ministry of Commerce inspected the Fengtai District to promote an expansion plan for Xinfadi. An insider told NewsChina on the condition of anonymity that the plan had been stuck in the zoning process since 2018 since a portion of the land had been already allocated for green space. Xinfadi had been in negotiations with the Fengtai government over compensation for rezoning.　

The Xinfadi market was built on a rural collective enterprise. Although legally a stock company since 2008 with the State-owned Beijing State Assets Operation and Management Center holding 22 percent share, the village’s collective enterprise is the majority shareholder. While Xinfadi has since developed into a commercial empire that covers accommodations, catering, construction, logistics, entertainment and real estate, it still operates as a collective enterprise. Nepotism is rampant, with Zhang Yuxi’s relatives holding leading positions. 　

Following the latest outbreak, Xinfadi’s general manager Zhang Yuelin, Zhang Yuxi’s son, was sacked. His successor, Zhang Lianming, is one of the market’s co-founders. 　

“Most of China’s long-established wholesale markets are run by families or rural collective enterprises,” Dai Zhongjiu told NewsChina. “As these markets follow the rule that investors should also manage and profit from it, management prioritizes profit and is less active about upgrading infrastructure such as data systems, which requires heavy investment up front and does not produce quick returns.”　

Public Interest

Some officials are seeking government support for wholesale markets. Zhen Zhen, a member of the Chinese People’s Political Consultative Conference (CPPCC ) and the State Council, wrote a report for the CPPCC’s official magazine about her inspection of major wholesale markets in Hunan, Hainan, Guangdong, Jilin and Shaanxi provinces, where she accused local governments of not supporting wholesale markets because they generate low tax revenues. She wrote that it was in the public interest for local governments to invest more in market infrastructure such as drainage, electronic payment systems, quarantine inspection and cold chain storage.　

Zhen’s idea somewhat conformed to central government policies in 2012 and 2014 to establish non-profit wholesale markets with local governments. A Xinhua News Agency report revealed that by 2017, China had 253 non-profit agricultural wholesale markets. 　

However, Yi Shaohua, a researcher at the Chinese Academy of Social Sciences and market circulation director at the Development Research Center of the State Council, suggested the government approach non-profit-oriented markets with caution. She warned in a 2014 article published in the Journal of Beijing Technology and Business University that new government-sponsored wholesale markets would disrupt the existing market competition. 　

Dai suggested that local governments or SOEs increase their shares in existing markets to have more say in management and operation. “If SOEs held more shares in the Xinfadi market and gave some guidance in management, the outbreak might not have occurred there,” he said. 　

“I don’t think the government holding more shares would inhibit the participation of private shareholders. Instead, it would diversify stakeholders and stimulate initiative... Anyway, we should legally define wholesale markets as for the public interest,” he added. 　

But as Yi wrote in the 2014 article, government or SOE management still requires expertise and supervision. 　

Chinese experts have been calling for wholesale market law to regulate agricultural product distribution and supervision responsibilities. There is still no law in place.　

Considering their sanitation and traffic issues, for years the Beijing government has been planning to move wholesale markets, including Xinfadi, outside the city. 　

But as Xinfadi is a leading supplier of the capital’s produce, those interviewed told NewsChina that a more practical solution would be to have it upgraded as soon as possible.

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