<article><p>China&#8217;s state-run cooperatives are making a comeback as the Xi administration works to bolster national distribution chains, with sales fast approaching that of e-commerce leader Alibaba Group Holding.</p></article>

<p>China&#8217;s state-run cooperatives are making a comeback as the Xi administration works to bolster national distribution chains, with sales fast approaching that of e-commerce leader Alibaba Group Holding.</p>
<p>Supervised by the government&#8217;s All China Federation of Supply and Marketing Cooperatives, these groups sell food purchased straight from farmers and other daily necessities. Revenue jumped 19% in 2021 to 6.26 trillion yuan ($891 billion) — around 80% of Alibaba&#8217;s, and outpacing the 12% increase in overall retail sales in China.</p>
<p>A new cooperative opened up in October in the central Beijing area of Tuanjiehu. On a recent morning, the store was packed with middle-aged and elderly shoppers.</p>
<p>&#8220;Radishes are cheaper here than at other supermarkets today,&#8221; said a female shopper.</p>
<p>The co-op resembles most other grocery stores except for a poster near the entrance that featured a political slogan, &#8220;Follow the Communist Party, walk with the Communist Party,&#8221; instead of displaying daily deals. A sign on the wall boasted a &#8220;guaranteed&#8221; supply of products.</p>
<p>Food co-ops were created in 1950, shortly after the People&#8217;s Republic was founded, as the government and the Communist Party sought to improve access to essential products. They served as China&#8217;s main distribution channel for food and other daily necessities during its years as a planned economy.</p>
<p>They lost ground to private-sector companies after China&#8217;s reform and opening up. But they have regained momentum since President Xi Jinping became the leader of the Communist Party in 2012. Their revenue increased 2.4 times between 2012 and 2021.</p>
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<p>The comeback has been driven in part by China&#8217;s zero-COVID restrictions, which have led more people to cook and eat at home.</p>
<p>Xi has also pushed for more co-ops. Many were set up across China ahead of the Communist Party congress in October, a possible effort by regional officials to bolster their list of accomplishments.</p>
<p>Given the number of alternatives for cheap and fresh groceries in China today, there is speculation that the renewed focus on co-ops is more of a way for Beijing to increase involvement in nationwide distribution networks.</p>
<p>&#8220;The government could be trying to prevent disruptions to food distribution in the event of a future crisis,&#8221; said a professor at a university in Beijing.</p>
<p>For example, the U.S. and the rest of the international community could impose economic sanctions on China should it attempt to unify Taiwan by force. This in turn could result in food insecurity and hurt the Communist Party&#8217;s grip on power.</p>
<p>According to official Chinese data, the country produces 95% of its grains. But some believe the actual percentage is around 70% to 80%. It also relies on imports for the majority of its soybeans, a main feed for pigs.</p>
<p>The resurgence of co-ops seems to evoke mixed feelings among the public, especially for older Chinese who see them as a throwback to a much poorer China.</p>
<p>&#8220;When I was a child, my parents used to exchange rationing coupons for produce at the co-op,&#8221; said a Beijing man in his 50s. &#8220;It&#8217;s like we&#8217;re going back in time.&#8221;</p>
<div id="AdAsia"><em>This article first appeared in <a href="https://asia.nikkei.com/Business/Food-Beverage/China-s-state-run-grocers-approach-Alibaba-in-sales">Nikkei Asia</a>.</em></div>
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Their revenue jumped 19% in 2021 to $891b—around 80% of Alibaba's and outpacing the 12% increase in overall retail sales in China.

State-run grocers approach Alibaba in sales as China bolsters distribution chains

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State-run grocers approach Alibaba in sales as China bolsters distribution chains

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