CapitaMall Fucheng in Mianyang city's Fucheng district in Sichuan province. Australia-based research and consultancy firm Ubris said the number of malls in China has swelled to 1,200, with 100 to 150 new developments built every year. -- PHOTO: CAPITAMALLS ASIA
IT HAS been a long time coming but Chinese shoppers are finally reaping the benefits of the gleaming shopping malls we have taken for granted for decades.
Shopping in the mainland has long been a case of visiting the neighbourhood outlet or local produce markets.
While those shops and market stalls remain a mainstay in China, shiny new malls are mushrooming across the country, delivering huge opportunities to Singapore developers like CapitaMalls Asia (CMA).
A 2003 report from market research agency Euromonitor estimated there were 236 malls in China's major cities.
Mr Peter Holland, director at Australia-based research and consultancy firm Ubris, said that number has swelled to 1,200 malls, with 100 to 150 new developments built every year.
These new shopping malls can trump any here in the size stakes. In fact, China lays claim to three out of 10 of the world's largest malls.
One of them, Guangzhou city's sprawling New South China Mall, has a gross floor area (GFA) of 6.5 million sq ft - more than four times that of VivoCity mall. It even has a replica of France's Arc de Triomphe and an indoor roller-coaster.
China's tier-two cities, once dead zones for upmarket shopping, have leaped enthusiastically onto the mall bandwagon as well. Take Sichuan's capital Chengdu, which has 56 malls with a further 34 under development or in the planning stages.
'Mall space could therefore increase by 80 per cent over the next four years,' said Mr Holland.
Singapore-based mall owner and operator CMA opened CapitaMall Jinniu, one of its first malls in the western region, five years ago.
'It was a struggle for us to open the mall in 2006, to be able to lease out well (to good retailers),' said Mr Chan Kong Leong, CMA's general manager for west China, explaining that retailers were not convinced about operating in a mall.
'We needed to build retailer confidence, it took us a long time to convince them to go in,' he added.
It is a different story now with consumers and retailers. That mall is one of CMA's busiest developments in Chengdu, with daily traffic of 40,000 visitors on weekdays and 55,000 on weekends.
Chengdu's disposable income per capita has been rising. The Bureau of Statistics reported last year that annual per capital income had hit 20,835 yuan (S$3,992), almost 2.5 times the 2001's figure of 8,128 yuan.
The city's cashed-up consumers are not shy about spending, with annual retail spending showing double-digit growth over the last decade, soaring from 62.8 billion yuan in 2001 to 241.8 billion yuan last year.
Mr Chan said: 'Previously, shoppers in west China used to be more thrifty. But after the Sichuan earthquake in 2008, it seems more of them are taking a 'live for the moment' attitude and spending more.
'Chengdu shoppers specifically are willing to spend. Although they are impulsive shoppers, they have a somewhat herd mentality, but are also curious and open to new cultures.'
Retailers have also picked up on this behavioural change. Major Chinese brands such as Shanghai-based sporting goods store Hotwind have recently made inroads into western China.
The movement is not just from tier-one cities to tier-two; tier-three centres are moving up as well.
Mr Chan pointed to Three Countries BBQ, a restaurant chain founded in Yibin, a third-tier city that has opened branches in Mianyang, a second-tier city.
This sort of retail movement is a sign that retailers from all over are eager to gain a share of the rapid growth prospects in western China, noted Mr Chan.
Prominent Singapore brands are a dime a dozen in cities like Shanghai, Beijing and even Guangzhou, where the culture of consumerism has helped them establish firm customer bases.
Singapore retailer Awfully Chocolate has seven outlets in China but Ms Lyn Lee, the brand's owner, said she is always on the lookout for new opportunities.
She recently visited Chengdu for the first time: 'The city's infrastructure looks quite comparable to Shanghai's, but I don't know enough about the Chengdu consumer culture. I look forward to finding out more from locals and people familiar with Chengdu, and most importantly, meeting people who would love to grow Awfully Chocolate in Chengdu.'
But Singapore remains noticeably under-represented in the western region. Only a handful of businesses, including food and beverage operator Old Chang Kee, have made inroads into the territory so far, It seems that while the city holds much promise, many retailers are still reluctant to make headway into the area.
New players like Thai Express say setting up in Chengdu is a possibility, but more research needs to be done before they can give a definite nod.
Ms Gayle Phua, head of business development at Thai Express, said: 'The spicy dishes served here indicate that they might take to chilli well and we have heard they are willing to try new cuisines.
'But we're not so familiar with Chengdu as say Shanghai or Beijing so we have to explore a little bit more, like in terms of whether consumers will spend on something like Thai food and how much they are willing to spend.'
Despite this hesitation, CMA's Mr Chan is optimistic about the company's prospects in western China.
He said: 'We started off with our first-generation malls which were a new concept and now we're moving into developing our third-generation malls to meet the increasingly sophisticated needs of our shoppers.
'Yes, the region has changed a lot. But I feel that if you compare what we have here to cities like Shanghai, Beijing, we've achieved so much but we're still only in the early stages. We can still go much further in the years to come.'
Source - The Straits Times (http://www.straitstimes.com/Money/Story/STIStory_674003.html)