On September 26, 2024, the 5th China Liaoning International Fair for Investment and Trade (CLIFIT), hosted by the People’s Government of Liaoning Province grandly kicked off in Shenyang. Yu Miaojie, Deputy Secretary of the CPC Committee and President of Liaoning University was invited to attend the ‘Negotiation Activities on Brand Consumption Innovation and Development’, held at the New World Expo Hall and delivered a keynote speech. The following is the full text of the speech:
“At present, China is facing arduous tasks on reform and development and an extremely complicated international environment. However, under the strong leadership of the CPC Central Committee, China’s economy has entered a new stage of high-quality development. Especially at the Third Plenary Session of the 20th CPC Central Committee, 300 articles of tasks on reform and development were put forward in Chapter 15 Section 60, one of which is how to empower brands and how to stimulate consumption vitality. Here are my five points on how to realize these two goals to achieve the five new development concepts.
First, brand building is an important way to achieve new quality productivity.
Building and cultivating new quality productive forces is a systematic project that connects innovative allocation of factors, revolutionary breakthrough of technologies and deep transformation and upgrading of industries. In industrial transformation and upgrading, three kinds of industries should be considered, namely time-honored brands, traditional brands and new brands. Especially for products of time-honored brands and traditional brands, it is urgent to enhance the added value of raw material industries and extend the value chain. An important way to achieve that is to cultivate own brands. For example, the ginseng in Liaoning is a very good product. One way is to sell it directly and the other way is to cooperate with a brand, like Beijing Tongrentang. The added value and pricing are completely different. Through this example, we can see the importance of brands, especially the importance of cultivating new quality productive forces.
Second, how to cultivate competitive brands.
How to make a good brand that is affordable to consumers? A very important way or source is innovation. For example, Mi phones are fun and not expensive, which can guarantee a certain profit rate. To ensure a certain profit rate and the pricing is not high, it is imperative to reduce the average cost and marginal cost. To achieve that, the source can only be innovation. Especially two kinds of innovation, one is original innovation starting from scratch and the other is deep innovation, which enables enterprises to improve technologies, enhance productivity and reduce costs. R&D intensity is a good indicator both in China and Liaoning Province as China’s innovation intensity is 2.64%, which basically reaches the average level of 2.66% in OECD countries. The intensity in Liaoning Province is also among the top in China, among which Dalian’s innovation intensity exceeds 3.1%, higher than the national average. From this we can see the importance of innovation in cultivating competitive brands.
Third, greenness is the way that we must follow to cultivate competitive brands.
At present, ecological conservation has been written into the Constitution. China is a country that places ecological conservation at the very top of the agenda. Besides the well-known double-carbon goal, it is also an important goal to increase the proportion of non-fossil energies in primary energy consumption in China. At present, non-fossil energies account for about 17.5% of primary energy consumption and it is a long way to go to reach the goal of 25% by 2030. Residents’ consumption will have a greater demand for green products, so it is important to produce green and intelligent products.
Four, building a unified domestic market is an important way to achieve consumption upgrading and stimulate consumption potential.
One is to build a unified domestic market for products and services. In the past, the quality of foreign trade products was inconsistent with that of domestic trade products, especially the products sold in the first-tier markets with fierce competition had lower prices and better quality than domestic products. The main reason is that the international competition is more intense. To build a unified domestic market, it is necessary to change this and seek the same quality of domestic and international products. In other words, it is important to ensure the same quality, the same production lines and the same standards. Second, efforts should be made to effectively reduce trade costs and promote smooth logistics to integrate small markets in various regions into a unified domestic market, which will be very beneficial to the sales of enterprise products. At the same time, it is necessary to reduce invisible costs and better improve the business environment. Third, do a good job in supervision, especially quality supervision. Only by controlling the quality can the reputation of products be guaranteed. In turn, brands can be established and consumers’ dependence and trust on the brands will be further improved.
Five, actively improving the permanent income and disposable income of residents to stimulate consumption.
The premise of expanding consumption is a permanent increase in income. The way to increase income permanently is to effectively increase disposable income. From the perspective of personal income, if the pre-tax salary of a person is 10,000 RMB, it is hoped that he can get 7,000-8,000 RMB after tax. To achieve this, taxes and fees should be reduced. Tax reduction is something that the central government should strive for by considering appropriately raising the threshold of personal income tax from 5,000 to 8,000 RMB and adjust the specific value of each progressive tax rate. In addition, indirect taxes can be reformed and the consumption tax collection link proposed by the Third Plenary Session of the 20th Central Committee of the Communist Party of China can be effectively transferred to the back end. Reducing fees is more for local governments to do. By optimizing the business environment and reducing taxes and fees, the net income of ordinary people will be more effectively improved, and consumption potential will be better stimulated. ‘Opening up’ is an important way to drive and stimulate consumption, which includes two aspects. One is to expand imports and the other is to better integrate the imported intermediate products with domestic intermediate products. Expanding exports is another way. Only through the empowerment of brands can products become more competitive internationally and their qualities can be recognized internationally. While ensuring that the export volume remains unchanged or rises steadily, prices will rise faster, and the export value can be continuously improved.
Therefore, efforts should be made to empower brands from innovation, greenness, coordination, sharing and openness, while stimulating consumption potential. By doing so, the comprehensive revitalization of Northeast China is just around the corner, and it also serves the realization of Chinese modernization goals.”