Content library

Jun
2015

City Report – Chengdu

Located in the fertile Chengdu Plain, the city has been referred to by many names throughout history. Chengdu has a monsoon-influenced humid subtropical climate and is largely mild and humid. It has four distinct seasons, blessed with abundant rainfall, and relieved from both sweltering summers and freezing winters. Therefore, the weather in Chengdu is cool in the summer and warm in the winter. It has been called the Country of Heaven and the Land of Abundance, as well as the city of hibiscus, of brocade, and of turtles, while serving as the home of the giant panda. But today, Chengdu is a Chinese city of the future, a rising star drawing global attention.

 

Financial performance

Chengdu, the capital city of Sichuan Province, has the population of 14.05 million (2010), per capita GDP of 50,820 RMB (2011) and growth rate (2011) of 15.2%. It is classed as one of China’s top tier two cities. In 2010, Forbes magazine ranked Chengdu top among the 20 fastest-growing cities in the world for the coming decade. And in 2011, Fortune magazine listed Chengdu as one of the world’s 15 top emerging business centres.

According to the China Business Report 2011-2012 released by the American Chamber of Commerce in Shanghai, Chengdu is the most popular second tier city for international firms to expand into, and has remained at this position for the past four years. Official statistics also show that Chengdu attracted the sixth highest volume of actual foreign investment among Chinese cities in 2011. The amount totaled US$8Billion, up 25 per cent from previous year. It is also one of the best destinations for domestic investments, which reached RMB256.5Billion (US$40.2Billion), showing an annual growth rate of over 30 per cent.

China’s state council has designated Chengdu as the country’s western center of logistics, commerce, finance, science and technology, as well as a hub of transportation and communication. It is also an important base for manufacturing and agriculture. The main industries in Chengdu – which include food, medicine, machinery and information technology are supported by numerous large-scale state-owned enterprises. Many high-tech enterprises from outside Chengdu are also beginning to establish there.

The city’s retail property sector is also thriving. Real estate advisors CBRE have ranked Chengdu as one of the world’s top 100 retail hubs. Local statistics show that total retail sales of consumer goods in Chengdu reached RMB 286Billion (US$ 45.4Billion) in 2011, accounting for 42 per cent of the local GDP. The year-on-year consumption growth in Chengdu was 18.4 per cent last year, 7.6 percentage points higher than in Beijing. According to Savills, there are ten more retail projects entering the market in 2012, adding approximately one million sqm to the city’s retail space.

 

Government policy

Chengdu Municipal Government clearly stated its strategy in 2012 of building Chengdu into a fashion shopping paradise, to consolidate and improve the position of its commercial center, to promote the service sector and encourage the development of new high-end retail formats. It has recently commissioned The University of Science and Technology in Chengdu to compile a report into the performance and history of all the luxury brands in the City, and to evaluate the macro economic effect the city has had on them and they have had on the city.

 

Luxury Distributions

As the Southwest’s most prestigious fashion capital, Chengdu is regarded as a strategic location by many fashion brands, and the consumer price index has been among the best in Forbes China ‘Best Commercial City’ rankings in recent years. Currently, 80% of international brands already in tier one cities have established in Chengdu. Other than luxury cosmetic brand counters which have opened in the general department stores, there are 6 luxury brand shopping malls in Chengdu, 2 of which are outlet malls.

Within the centre of Chengdu, there are three principal centres where luxury retail can be found, the Chunxi Road Commercial Zone in the North East, the Yanshikou Commercial Zone in the North and the Central Business District.

Renhe Spring Department Store

Opening in 1993, this department store is host to luxury brands such as Gucci, Cartier, Zegna, Bvlgari, Emporio Armani, Burberry, Givenchy, Vacheron Constantin, Bally, ArmaniCollezioni, Rolex, Mont-blanc, Hugo Boss, Dunhill, Piaget, Omega, Coach, MaxMara sold at concession counters.
The store has 150,000 VIP’s on its list; the 7000 Diamond Club members each spend over 100,000 RMB per year. The store itself had annual sales in 2011 of 4 Billion RMB that was the highest figure per square metre of any department store in China. 2012 sales are expected to reach 5 Billion RMB.

Yanlord Landmark

Opened in late 2010, Yanlord Landmark hosts a great number of world renowned image and flagship stores, international high-end franchised clothing stores, themed and concept stores experience stores, high-end catering and leisure facilities. Currently brands in residence include:
LV, Dior, Prada, Zegna, Burberry, Tod’s, Berluti, Mikimoto, Agnona, Hugo Boss, Rolex, Canali, Normana, Autson, Windsor, Dunhill, Cerruti 1881, D’urban, G&H, Baldassari, Fenix, Moneta, 7 for all Mankinds, Porsche Design.

Maison Mode Lessin

Opened in 2007, Maison Mode Lessin operates on the base of mono American and European brand shops, including those of Hermes, Gucci, Salvatore Ferragamo, Bottega Veneta, Versace, Fendi, Tiffany & co, Emporio Armani, Chloe, Celine, Brioni, BrunelloCucinelli, Daks, Paul & Shark, Ralph Lauren.
Many designer brands such as Dior Homme, Alexander Mcqueen, Comme des Garçons, Junya Watanabe, D Squared2, Martin Margiela and Stella McCartney have chosen to be situated in Maison Mode Lessin. The mall has a VIP club that has to date over 70,000 members that receive a range of special privileges.

Seibu Department Store

In 2010, the owners of Seibu Department Store sold the mall to a local Chinese firm. This change, compounded by the opening of Yanlord, and the aggression of the other malls, led to many top brands vacating Seibu, after which fast moving fashion brand Zara took the first and second floors to create their first flagship store in Western China.

 

Editors view

The geographical situation of Chengdu is interesting as it sits on a large plain in the west of China. The provinces around it are mountainous and the weather poor. Chengdu by contrast has a reasonably temperate climate. As a foreigner there, one notices how calm and polite the people are. They are well dressed and the city is not frantic. When we consider that during the Japanese occupation of China, Sichuan was the only province they never took over, possibly because of the mountains that surround it, this may indicate that for hundreds of years the people of the province have lived a relatively peaceful life and learned to enjoy themselves.

 

Consumer attitudes

According to the General Secretary of Chengdu Retail Industry Association, Song Jianchao, more than 100 top international brands have established in Chengdu so far, because of the region’s purchasing power. A CCTV data survey indicated that the people of Chengdu are willing to enjoy and dare to try new things and their willingness to consume is higher than the national average. The spending on clothing, food and transportation in Chengdu is much higher than 36 cities in western China. The annual sales of the LV direct store in Chengdu have consistently ranked in the top three in the nation, just below Beijing and Shanghai.

Chengdu acts as a magnet to the population of Sichuan that live elsewhere in the province, and who frequently visit the city for holidays and to shop. Many choose to buy a second home there, ready for their retirement or when their Children go to university.

 


Top