Download Boom Regional Economy & Develop Catering Industry in Small Towns

M & D FORUM
Boom Regional Economy & Develop Catering Industry in Small
Towns
YUAN Jinming
College of Tourism, Central South University of Forestry & Technology, No.498 South Shaoshan Road,
Changsha City, Hunan Province, P.R. China, 410004
[email protected]
Abstract: At present, the construction of small towns in China is still in its infancy. Based on the actual
situations of most small towns, this paper proposes to develop catering industry in small towns with low
costs, chain operation, to start chain operation by creating food brand through technical innovation, to
drive the development of relevant industries, especially to consolidate the base status of agriculture and
solve the core problem of farmers' income increase and employment. To develop catering industry in
small towns is the best way to satisfy the demands of farmers’ investment employment and the objective
need to Boom Regional Economy and develop the market in small towns. It is also the historic
inevitable choice for the quick, safe and sustainable development of small towns.
Keywords: Small Towns, Catering Industry, Surplus Labor, Regional Economy, Rural Area
1 Introduction
The urbanization is the necessity of the development of human progress and one of the important signs
of social progress. No country is impossible to surpass the historical stage of development. China's
urbanization is in serious lag, which greatly restricts the expansion of market capacity and the economic
and social development. Accelerating urbanization process is not only an objective requirement to
change China’s urban-rural dual structure, but also the inevitable choice to achieve the coordinated
development of industrial & agricultural modernization and the urbanization. Since reform and opening
in China, urban and rural appearance have been greatly changed, the social economy had made great
progress. At the same time, there also appear problems to be solved, a fundamental one of which is the
transfer of rural massive surplus labor force. The key lies in the urbanization should be the development
of small towns which have the majority of population. The key to promote the economy of small towns
lies in choosing which industry to advance its growth and how to solve problems of rural surplus labor
to have a steady development. The low risk, easy accessibility, high growth rates, labor-intensiveness
and the driving effects on other industry of catering industry make it an economic growth point and sally
port suiting the realistic situation of small towns.
2 The Analysis of the Feasibility of Developing Catering Industry in Small Towns
The urbanization of developing countries started late. Generally, there are two ways: drive the
urbanization by the development of industrialization or drive the urbanization by the development of
tertiary industry. The funds accumulations for the industrialization are mainly from agriculture. One
method is to allow farmers to be independent commodity producers to transfer agricultural surplus labor
into industrial construction capital through the market mechanism without governments’ intervention.
The second is to transfer agricultural surplus labor through the agricultural tax or “price scissors” of
industrial products[1].
2.1 To promote urbanization through the development of industrialization
It is a common choice for most countries to promote urbanization through the development of
industrialization. The centralization and scale of industrial production is an objective requirement of
productivity development. Industrial production is inevitable to gather around town, which promotes the
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building of new towns and accelerate the urbanization process. From the development trend, the cases
for the developed and developing countries are different. In the developed countries, the share growth of
industrial output is basically synchronous with the transfer of agricultural populations to industrial ones.
While in the developing countries, the transfer of production value structure is generally greater than
that of employment structure. Namely, the industrialization is faster than urbanization, for which there
are two reasons: on the one hand. There are more and more advanced labor-saving industrial
technologies for developing countries, especially those populous but backward countries. The transfer of
employment structure is inevitably rather slow in early stage. On the other hand, the prices of industrial
products are often high and that of agricultural products are low in the developing countries[2].
2.2 To promote urbanization through the development of tertiary industry
Latin America is the typical delegate of such mode. Its urbanization is built on the tertiary industry.
Commerce occupies a large proportion. Each city of Latin America is full of small shops and vendors.
In addition, about 32% of Brazil urban population, most of which are female, are engaged in domestic
service[3].
2.3 The feasibility of promoting the development of small towns through catering industry
As a traditional agricultural country with large population, China's tertiary industry demand is big. The
employment opportunities are excessive and income level is high, which make it a main way for the
development of urbanization. The reasons are as follows:
Although township mineral & industrial enterprise played an important role in absorbing rural surplus
labor, the mode of production and operation in their economic development were backward, especially
the insufficient resources (capital) for the expansion and employability and limited capacity in
absorbing rural surplus labor[4]. Secondly, with the increasing demand to improve labor productivity and
higher technology intensive degree of industrialization, the labor constituent has changed. At the same
time, fundamental problems for China's development of industrialization not driving the urbanization
development are as follows: the declined traditional manufacturing industry, the shift of industrial
activity, the improvement of local traffic condition in rural and small towns, increasing requests of
residents for environmental quality improvement[5].
Because of the world’s agricultural policy adjustment, it gives great outside pressure to the agriculture
development of our country. Large amounts of cheap foreign agricultural products will flow into our
country and the quality and prices of our agricultural products are not competitive. To develop catering
industry in small towns has greater potential to increase farmers' income and promote agricultural
deepening upgrade. First, it is helpful to optimize agricultural industrial chain and increase farmers'
income. Second, it is helpful to expand the market capacity for agricultural products and effectively
solve the problem of agricultural “sales difficulty”. China has 5.4 million urban residents, 8 million
farmers. In this kind of urban and rural pattern, agricultural market is absolutely constrained. As long as
agricultural products are increased by 2%, agricultural products supply for the city market will be
increased by 10% and the price will drop by 20%. The development of catering industry in small towns
could transfer some farmers into urban residents, which can expand new civic consumer groups,
increase agricultural demand. Third, it is helpful to overcome the problems of high production costs, low
capital utilization rate and serious environmental pollution, etc. According to foreign related calculation,
leading enterprises as the core structure mode of production can help to achieve appropriate
concentration of township enterprises and adjust the production structure. Its employment ability will be
greater than that of disperse investors employment ability (including joint effect) by more than 50% [6].
Fourth, the costs and risks to transfer the independent foodservice operators into the restaurant chain
enterprise are very small [7]. For example, local government of Malaysia built many vending booths and
awnings in small towns to encourage those informal food sellers. A very simple method in Indonesia is
to enclose a street for changing it into a catering night market. But the thresholds for these small
franchising shops are mainly concentrated in software, such as talents and the standardization of service.
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The standards in aspects of financial and technical requirement are not high. Fifth, the of development
Small towns has the driving effects on catering industry, which creates more opportunities for farmers’
employment and services. Meanwhile, since social security mechanism has not been completely
established, other ways hardly absorb lots of rural labor force and solve the problems arising from it.
It’ll be a breakthrough to transfer rural surplus labor by vigorously developing catering industry in small
towns, encouraging farmers to invest and work in small towns, speeding up the industrial restructuring,
promoting the movement of production factors and increasing employment space.
3 Analysis of the Necessity to Develop Catering Industry in Small Towns
Specifically, the necessities to develop catering industry in small towns lie in the following four aspects.
3.1 Stimulate domestic demand and accumulate folk loose capital
As annual report issued by China cuisine association shows that the retail sales of national catering
industry in 2009 reached 1799,8 billion yuan, an increase of 16.8% year on year[8]. It has become an
industry of the fastest developing speed and the highest growth in domestic consumption demands.
Among the top 100 enterprises in catering industry, 51% belong to private property. Actively guiding
massive folk capital investment in catering industry in small towns can expand domestic demand and
promote national income redistribution, which have a function on the centralization and amplifying of
capital.
3.2 Absorb employment and create opportunities for personal development
Catering industry is a labor-intensive industry. Beyond doubt, any industry should increase the technical
content. But the reality of the small towns determines that it is a long process. The employment levels
for rural surplus labor can only be gradually improved. Take China Yum brands, chain group for
example. Data of 2010 shows that KFC has opened over 2100 restaurant chains in 450 Chinese cities.
By the end of 2007, KFC has employed nearly 150 thousands people in China, and produces 200-280
thousands indirect job opportunities every year [9]. KFC has continuously devoted funds and manpower
to various training of all levels. From restaurant waiters in the dining room, restaurant managers to the
personnel of company’s functional managements, the company has scheduled a scientific and strict
training plan according to the nature of the job. These trainings not only help to improve employees’
work skills, but also enrich and perfect the staff’s own knowledge structure and personality
development.
3.3 Promote the improvement of industrial structure with market constructions
Catering chain enterprises not only need a large number of raw materials, but also actively to evaluate
and train related suppliers. The evaluation system is able to have a scientific, strict, objective and fair
evaluation test on the suppliers, and help suppliers improve the quality of their products. To develop
catering industry in small towns most of raw materials such as grain, oil, pigs and vegetables are from
local areas, which can drive the transfer of agricultural product structure and preliminary and deep
processing procedures of corresponding products. Thus it helps to form benign interaction of the
commodity market, promote the specialization of rural production and the adjustment of industrial
structure.
，
3.4 Elevate civilization to ensure social prosperity and stability
In order to make life, rural surplus laborers gather in big cities, which causes a series of problems of the
traffic, housing, public security, employment and so on, which is a current potential worry to the society.
It is necessary to accumulate the surplus rural labor force in the nearby small towns, due to farmers’
emotion of their original living environment. It can also solve the problem of surplus labor, which stands
for a qualitative leap of life. Through the business or employment, the farmer will develop legal
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conceptions and naturally form hygiene habits. And the key to urbanization is not the quantity of urban
population. Instead, it should be measured through the employment and the employment benefits. To
develop catering industry in small towns is an important way to solve the "Three Rural Issues" and to
realize agricultural modernization, which has a very extensive social benefits and economic benefits.
4 Models to Develop Catering Industry in Small Towns
4.1 Coordinated development among industries
The construction of small towns has its own regularity. It will cause damages to local governments and
farmers, if it is violated. The urbanization refers to the process that human activities of production and
life have been transferred and expanded from rural areas to towns with the development of social
productivity, the power of which results from economic developing speed. In the initial stage of regional
urban development, the agricultural economic has dominance; the agriculture population has an absolute
advantage and the urbanization level is very low. In its acceleration stage, modern industrial base is
gradually established; economy is developed to a certain degree; industrial scale and speed quickens; the
agricultural productivity is also improved; the rural labor force is liberated; the accumulation of the rural
population to the towns and cities speeds up and the development of urbanization is accelerated. It is
obvious that economic development is the motivity to promote the development of urbanization. Zheng
Yefu, a professor in Renmin university of China, holds the idea that though towns share the advantages
of less capital investment and shorter construction period, they also has the disadvantages of relative
aggregation shortage of production factors, weak ability of cohesion and radiation and inadequate
division of labor in society. Accordingly, small towns should play its advantages of absorbing and
transferring rural surplus labor through "short, flat, quick" projects [10]. Professor MaoYushi in Beijing
Tianze Institute of Economics points out those small towns must have certain economic base and cannot
force the farmers to came into the towns, without providing employment opportunities [11]. "A city
without market" is not real urbanization. Many small towns’ construction depends on the single market,
such as "fan city", or "bearing town". In such city or town, the industrial structure is manageable. But if
we can't develop other industries, it is also very dangerous. Once such industry suffers appear a
significant change, it is extremely easy to cause big miserable damages to the whole town.
4.2 Create regional industrial chain and supply chain
In order to promote the sustainable development of catering industry in small towns, it is necessary to
adopt the economic model to foster leading enterprises integrating foodstuff processing, catering service
and modern logistics distribution, drive the development of other industries with the link of rural
material resources and human resources, to construct leading industrial entity and market entity by
raising construction funds through the joint-stock, membership, fund raising system. The economic
activities are to be orderly managed and operated by the economic entity. Accelerate to replace the
traditional manual arbitrary production, mill operation, human experience management to achieve the
industrialization, chaining and collectivization through the modern catering business operations with the
representative of the chain business, brand cultivation and technology innovation. Small towns can
draw lessons from the successful business experience of the supermarket chain and affiliated hotel and
implement the standardized production, management and service. With the core of regional leading
enterprises, self-brand should be built or foreign brands introduced to promote brand management,
capital management and product management to be an independent but associated entity to improve the
operation efficiency and quality of catering industry. At the same time, advantages of regional resources
should be made full use of and the purchasing and production should be localized on the basis of local
conditions. According to the needs of processing degree for food raw material of the modern green food
production standards and modern food chain operation, a new industrial production and supply chain
should be constructed to form an interactive benign circulation of regional agriculture, agricultural
product processing and catering services, which helps to start an urbanization way according with the
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objective law with our own characteristics.
4.3 Undertake chain management method
Catering industry is traditional services. Dining out is the inevitable demand in people's daily life. Its
market hardly changes and it belongs to the short, smooth and fast project. According to experts’
analysis, China's present per capita catering consumption every year is about 600 Yuan of RMBS, the
United States and Japan respectively $1500 and $2000, which indicates that food consumption has great
market potential in China’s process of the comprehensive construction of well-off society and the
urbanization.
In today’s socialization of divide-up, western fast-food can adapt to the public life and fast-paced needs.
Kitchen engineering can provide public food and convenient dishes, which becomes new service manner
of housework socialization. With folk capital as the main body, catering industry in small towns can be
more closely coruscate farmers’ enthusiasm in investment, business management and talents' training.
Catering chain operation mode can ensure the advantages of brands and quality. With such chain mode
and the developing orientation of local resources, catering industry in small towns establishes
professional market window for farmers, which helps the farmers adjust the production according to the
market information to ensure the products can enter the market, thereby, solve their problem of primary
products outlet.
5 Conclusion
Catering industry and agriculture are the most relevant industries. In promoting the industrialization of
catering companies in small towns, we should pay attention to combine the needs of the development of
the catering industry with the cultivation of the pillar industries, combine with the market construction
and combine with the development of township and village enterprises. In addition, developing catering
industry needs to dig deeper into food culture and combine it with regional tourism resources to choose
a connotative development road.
The rapid development of catering industry in small towns can bring about significant social benefits
and play an important role in promoting rural modernization reform, improving the productivity and
promoting rural economic development. First, it can generate economic cluster effect and promote the
development of other industries. Second, it accelerates the transfer of rural surplus labor. Third, it will
promote the formation and development of rural regional economy. The fourth, it promotes opening up
and further development of independent research through introducing foreign advanced chain
management technology and experience.
References
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