All retail pharmacies prior to January 2003 -– when WTO rules took effect – had by law must have been government-owned. Many of the state-owned pharmacy companies had consolidated to establish chains or franchises, and many more have contracted day-to-day management to an entrepreneur who pays a small percentage of the profits to its hands-off government owner. In Beijing and Shanghai, the local governments stopped approving applications for new pharmacies about three years ago, but is allowing chain stores to increase their number of outlets. Therefore, any "new" retail pharmacy in these markets must be affiliated with an existing outlet. In Shanghai, pharmacies must also contend with a rule that prohibits chains from opening outlets within a certain distance of existing pharmacies.
