In its latest effort to stimulate domestic consumption, the Shenzhen government has set up a dedicated fund to reward top-performing retailers by fattening their profit margins.
Mom n’ pop shops need not apply. The scheme is for retailers who have achieved more than RMB100 million in YoY sales growth. They will get a cash “reward” of RMB500,000, i.e., an addition of 0.5% to their profit margins for every RMB100 million of sales they achieve. The reward will be capped at RMB10 million per company.
The fund will also be used to encourage the development of original design, technological research and development, procurement and trading, events and exhibitions, and brand building. Companies making use of new technologies, such as IoT, big data and blockchain, to develop new retail projects, will be eligible for 20% of cost subsidies, capped at RMB20 million per year.
Moreover, Shenzhen is thinking global. It wants to see retailers focus on imports, and will therefore support a new trading platform for companies importing foreign goods. Some of the incentives are a bit hard to fathom, however. Importers bringing cars through the Shenzhen Port, for instance, will a cash reward of RMB3,000 for each car sold locally, regardless of its value or whether it is a gas-guzzler or an NEV.