Unfair competition was the main reason for the decline of domestic companies in the retail market, said Zhang Jindong, Suning Appliance Group's board chairman, as he called on local governments to remove privileges that are given to foreign retailers to attract overseas investment.

Zhang said in order to attract investment, local governments granted many privileges to foreign enterprises in such things as land prices and rental costs, which reduced the competitive edge for domestic companies, the Beijing Morning Post reported Monday.

"How can domestic companies compete with their foreign counterparts when the rental cost for them is 2 yuan (29 cents) per day while the foreign companies only have to pay 0.2 yuan?" Zhang asked while taking reporters' questions during the ongoing Two Sessions in Beijing.

According to Zhang, McKinsey & Co predicted that 60 percent of China's retail market will be dominated by 35 global retailing giants in 35 years. That would bring about severe consequences to China, he noted.

The retailing sector serves as the "throat" for products to enter the market, Zhang explained. Should it be monopolized by a few foreign companies, it would also pose threats to the country's control of its manufacturing industry on the lower end and the stability of the financial sector on the upper end, Zhang warned.

Instead of giving overprotection to domestic companies or privileges to foreign ones, local governments should create a fair, open and loose environment for domestic and foreign companies to compete in the market, Zhang said.