Performance Implications of Buyer-Seller Relationships in China's Agricultural Wholesale Markets: An Empirical Study

China's agricultural wholesale markets are characterized by a large number of traders, high risks and poor business services. Regular buyer-seller relationships help traders cope with these market imperfections. About half of the traders surveyed have regular suppliers or clients, and regression results show that those relationships have strong positive effects on trader performance. Profits for traders dealing with regular suppliers are 46 percent higher, and traders with regular clients are 52 percent more profitable than their counterparts. Education, experience and technical efficiency also have significant positive effects on traders' profitability. However, contrary to our expectations, trader association membership has no relationship with traders' profits. Besides, there is no evidence that regular buyer-seller relationship will negatively affect trader's input use. On the contrary, suppliers/client relationships have positive effects on trader's permanent labor input.