Research On Efficiency Of Retail Industry In Fujian Based On A DEA Approach

China formally joined the WTO on December22nd,2001. According tothe commitment of Chinese government in the field of opening retail industry,China will fully open its retail market to foreign capital on December24th,2004.As to the Fujian province, the retail giants, such as Wal-mart, Metroand Carrefour have successfully get into the retail market of Fuzhou andXiamen which quickly broke the existing framework of the retail industry. In2008, the economic crisis weakened the export and investment. In that case,stimulating the domestic demand and consumption turned to be a new wayeconomic growth. Under this condition, how domestic retail enterprises benefitmore through improving technical efficiency in the competition withforeign-funded retail enterprises and Hong Kong, Macao and Taiwaninvestment retail enterprises seems to be urgent.The paper analyses the status of efficiency of the Fujian retail enterprisesabove designated size on the basis of the Data Envelopment Analysis (DEA)using the data of the first economic census in2004and the second economiccensus in2008. The study suggests that, the technical efficiency of theforeign-funded retail enterprises seems to be the highest and the most stableand most are efficient. However，most domestic retail enterprises are notefficient. The inefficiency mainly derives from pure technical inefficiency andscale inefficiency. At the same time, most scale inefficient domestic retailenterprises are decreasing returns to scale which implies that technologicallevels can’t keep pace with the scale enlargement. As to the Hong Kong,Macao and Taiwan investment retail enterprises, the efficiency ranking in2008is lower than in2004.The inefficient enterprises also have the problem of scaleinefficiency. The projection analysis provides the direction of efficiencyimprovement for different types of enterprise. Finally, the paper analyzes the accessible factors on efficiency, including supply factors and demand factors.On that basis, suggestions were made as to improving the retail industryefficiency in the angles of supply and demand.