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Nov
2014

City Report Chongqing

Chongqing is a municipality directly under the central government control, and is the central city in southwest China covering an area of nearly 82402.95 sq. km. It is one of China’s most important modern manufacturing bases and a comprehensive transportation hub in the southwest of the country. Becoming a municipality in 1997, the Chongqing economy has made significant gains, forming huge numbers of industry clusters in the electronic information, automobile, equipment manufacturing, chemical, material, energy and manufacturing sectors. The Eurasia International railway is one of the international railway lines running from Chongqing to Europe that opened in January 2011. The railway line from Chongqing to Duisburg has a total length of 11,179 km, is one of the longest railway connections in the world.

Situated in a subtropical monsoon climatic region, the city has a moderate climate, with an annual average temperature of approximately 16~18 degrees centigrade. It is also known as ‘the foggy city’ and has over 100 foggy days each year.

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Economy

In 2013, the GDP of Chongqing’s reached 1265.7 Billion RMB, an increase of 12.3% compared to the previous year. Industrial output also increased to 1.84 Trillion RMB, up 13.8% over the previous period. Primary industries grew by 3.488 Billion RMB, a relatively small increase of 0.3%; however, the secondary industries increased by 12% to 135.78 Billion RMB, and tertiary industries by 163.23 Billion RMB, up 8%. In 2013 the city had 1,457 industrial enterprises turning over more than 20 Million RMB and total industrial output profits reached 85 Billion RMB, up 40% compared to the previous year. The city’s total retail sales of consumer goods reached 403.34 Billion RMB, an increase of 14% and per capita disposable income of its urban residents reached 23,968 RMB, up 12% on 2012.

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Luxury retail distribution

There are three main business circles in Chongqing, the Guanyinqiao, Jiefangbei and Yangjiaping districts. Many large shopping malls selling both international and domestic well-known brands of clothing, accessories, shoes and cosmetics have been established in these areas. The Guanyinqiao district is the center of Chongqing politics, economy and culture, and has the most developed transportation connections. It has many large shopping plazas, including the Starlight 68 Plaza and Stage Mall. In Jiefangbei district, includes a pedestrian street handling more than 300,000 people daily, and more than 1 million at peak holiday times. Jiefangbei business district also contains the Gold Eagle, Times Square, and WFC malls. Yangjiaping district located in the old industrial base area where a huge number of local residents live and most of them preferred shopping in the malls around, such as MIXC rather than go to the city center.

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Starlight 68 Plaza

Starlight 68 square was Chongqing’s first high-end Shopping Mall and southwest China’s largest luxury cluster. The footfall is between 400 and 700 thousands people every day, and the mall covers an area of 35,000 sqm. Current luxury tenants are: Gucci, Hugo Boss, Bally, Cartier, Coach, Max Mara, Daks, DKNY, Gucci, Omega, Versace Jeans, and Paul & Shark.

Stage Centre

Stage is a high-end large-scale complex shopping mall, with a Chinese strapline of ‘the world’s first luxury shopping center with a style of Broadway’, which opened in the middle of 2014. Current luxury tenants are: Maria Luisa, Balmain, Pierre Balmain, and Neil Barrett.

Gold Eagle Mall

Gold Eagle is located at the center of the walking street in the Yangjiaping business district and has become a top fashion shopping landmark. Current luxury tenants are: Gucci, Omega, Longines.

Times Square

Times square is one of South West China’s highest positioned shopping malls and is home to more than 100 well-known international brands, such as: Louis Vuitton, Tiffany & Co., Tod ‘s, Burberry, Alfred Dunhill, Salvatore Ferragamo, Emporio Armani, Giorgio Armani, Cartier, Ermenegildo Zegna, Baume & Mercier, Bvlgari, Marc By Marc Jacobs, Givenchy, Glasstique, Daks, and Giuseppe Zanotti Design.

WFC

WFC opened in January 2014 and covers an area of 204,700 sqm, and is the tallest building in western China. Luxury brands to be found there are: Prada, MiuMiu, Givenchy, Dolce & Gabbana, Celine, Yves Saint Laurent, and Dsquared2.

MIXC

The Chongqing MIXC opened on September 19th, this year. It is the 7th MIXC in China and home to 320 independent brand stores over a retailing area of 130,000 sqm. Luxury brands to be found there are: Longchamp, Moncler, Bottega Veneta, Tod ‘s, Roger Viver, Alfred Dunhill, Givenchy and Coach.

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Consumer attitudes

The Chongqing regional government has carried out a series of luxury goods consumption surveys in order to attract the world’s top brands. Results show that the current Chongqing high-grade consumers are mainly concentrated in the middle-income groups rather than the rich. These groups’ have a monthly income of between 6,000 and 20,000 RMB, and account for 48.2% of the luxury consumption, 62.2% of them spend an average of 1,000 to 5,000 RMB a month on luxury items.

“The Chongqing consumer is crazy about luxury goods, I have to go to Europe for 5 or 6 times and order more than 10 million Euro worth of fall and winter products.” Chongqing fashion buyer Guo Ying said.

‘If more luxury brands’ enter the market, it will increase luxury consumption in Chongqing. Luxury consumers not only focus on the price, but also the category and style.’ according to Li Ming, a Vice General Manager of the Starlight 68 Square Plaza

“Chongqing has become a home for designer brand consumption and multi-brand collection stores are an inevitable trend. A multi-brand collection store must choose goods according to the local geographical features and lifestyle, and offer consumers distinctive services.” according to Liu Peng, a Vice President of Chongqing ATTOS.

Editor’s view

The luxury markets in first tier cities are close to saturation. As one of the fastest growing cities in the west, Chongqing has become a strategic location for many luxury brands. According to the latest HuRun research, there are 11,500 people have assets over 10 million RMB and 730 have assets over 100 million in Chongqing. The consumption demand of the population is huge.

According to the Chongqing Regional Government in 2013, the Jiefangbei district consumption of watches and jewelry improved and even reached the top position in terms of sales in China. In September 2014, a large Chongqing website called “CQ.QQ.com” launched a luxury consumption survey. Results showed that the 20-35 year old group showed strong spending power on fashion becoming the main luxury consumption group in the city. 40.59% of people in Chongqing claimed that fashion consumption accounts for 10%-20% of their personal income, and 29.21% indicated that fashion consumption accounts for 21%-40% of their personal income.

Overall, the Chongqing luxury consumer tends to be younger, and the middle class desire for luxury goods is strong. Although Chongqing now has a number of very wealthy people, this group does not identify strongly with local luxury consumption, but these high earners do have greater potential for consumption of high-end brands.

The fact that the Chongqing authorities’ have surveyed the luxury market also shows that not only the consumers, but also the Chongqing government is paying a great attention to luxury in order to improve the image of the city. Although the Chongqing economy has been developing rapidly, the status of fashion industry has not developed in the same pace, especially when compared to the nearby Xi’an and Chengdu, in terms of the size and quantity of first-class international brands taking up residence. It is expected that after more luxury brand’s enter the city in the future, the market will fill the current gap that exists for high-end consumption.


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