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Chinese domestic retailers are prepared and capable of competing with the sector fully open to foreign investors, said Long Yongtu, secretary general of the Bo'ao Forum and former China's chief WTO negotiator.

Long said at a recent seminar held on retail industry development that the impact of foreign capital in the industry is very limited.

"The best protection is opening up," said Long, calling domestic companies to broaden their horizon and pay more attentionto the rural market.

China's retail sector has been opened fully to foreign capitalssince December 2004. So far, foreign retailers have invested 4.2 billion US dollars in China's mainland, accounting for less than one percent of the total sum used by the country. Chinese authorities have approved 295 foreign-funded ventures in the country.

Hua Tian, general manager of the Guomei Electronic Appliances Company, is confident about his company.

"Though foreign companies have the advantage of brands, professionals, marketing technique and advanced management, they face many obstacles when entering China's market, like consumptionculture they are not familiar with, inefficient logistics and backward after-sale services," said Hua.

Wal-Mart's cautious attitude toward opening new stores in Chinaseemed to be proving Hua's comments.

Li Chengjie, deputy president of Wal-Mart China, said that though the sector has been fully opened to them, they will not open too many stores in a short period of time.

"Only those making profits can survive," said Li.