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Jun
2015

City Report Foshan

Foshan, a prefecture-level city and the third largest city in Guangdong is located in the centre of the province, bordered by Guangzhou to the east and Hong Kong and Macau to the south. As a location it is one of the important bases for China’s merchandise exports. As China’s advanced manufacturing base and Guangdong’s significant manufacturing center, it is also one of the top cities in terms of the economic development in the province being at the transportation junction of the Xijiang river basin. The city has a moderate and moist climate, and an annual average temperature approximately 22 degrees centigrade.

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Economy

The GDP of Foshan in 2013 was 701.01 Billion RMB, an increase of 10.0% compared to that of 2012. Among them, the primary industries increased 2.8% to 13.91 Billion RMB, the secondary industries by 11.4% to 434.036 Billion RMB and the tertiary industries reached 253.08 Billion RMB, an increase of 7.6%.

Industrial added value increased to 365.28 Billion RMB, or 12.7% for the same period in 2012. The state-owned and state held enterprises increased by 5.2%, while private enterprises increased by 14.1%. Hong Kong, Macau, Taiwan and foreign invested enterprises also increased by 10.0%.

The total retail sales of consumer goods was 380.38 Billion RMB, up by 10.0%, and per capita disposable income of urban residents increased 8.2% to 28,309 RMB.

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Luxury retail distribution

There are three primary business zones in Foshan, among them the Zumiao Road zone is one of the earliest and regarded as the most mature shopping area. Located in the heart of Foshan, it covers products of all levels, the Guangzhou Friendship Store (Foshan Store) is the main high-end shopping mall within the zone.

The financial services sector of the Jihua Road business zone is well developed, and brings together a large number of fashionable white-collar consumers who appear to be the major consumer group for luxury products. The Sunlink International Centre is located in this area.

City Report-Foshan

The Guangzhou Friendship Store (Foshan Store)

Opened in December 2011, The Guangzhou Friendship Store (Foshan Store) has attracted many well-known brands from the cosmetic, clothing, accessories, and the watch and jewellery sectors including those of Omega, Longines, Gieves & Hawkes, Kent & Curwen and Cerruti1881.

The Sunlink International Centre

Opened in 2005, the store covers an area of nearly 29,000 sqm over five floors, selling both international and domestic brands that include Dunhill, Givenchy, and S.T. Dopoint.

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Consumer attitude

Thanks to its prosperous economy, the cities residents have strong purchasing power and a willingness to purchase luxury items.

‘Not only the wealthy are obsessed with luxury brands, a lot of white-collar consumers are also very crazy about them too. Some of my friends who come from a normal family with only 2,000 – 3,000 RMB income per month also wear luxury branded clothes when they go shopping.’ said Miss Li, who works in the retail industry.

There is no doubt that the city has a huge potential market for luxury goods, but consumers here would prefer to spend money out of the city at other destinations, and of course, the neighboring cities of Guangzhou, Shenzhen, Hong Kong and Macau are top of their list.

“There have been plenty of luxury brands that have entered Guangzhou. Conversely, although Foshan holds the ranking of 15th in 2013 for GDP, we can only find six or seven luxury brands in the city. Guangzhou consumers can enjoy shopping, dining and entertaining in a large multifunctional shopping malls, while in Foshan, this type of one-stop shopping is immature.” According to Miss Li, a female columns editor of a Guangzhou newspaper

‘Because of the lack of a really high-end shopping centres in the city, wealthier consumers have to go shopping in Guangzhou, Shenzhen, Hong Kong and other places.’ said Mr Liang, a marketing officer who used to work in two large shopping malls in the city.

Editor’s view

Foshan achieved the third highest GDP in Guangdong province in 2013, and the 18th overall for China which ought to give it great potential in terms of the luxury consumption market. In addition to white-collar workers, there are also a large number private business owners and the rich second generation individuals who represent a great deal of potential to the market, in particular for luxury cars. Although there may not be enough high-end shopping malls, within the small city area, consumers can find almost all the luxury car brands, from Ferrari and Lamborghini to Bentley and Porsche.

However, due to the lack of high-end shopping malls and associated luxury items, the luxury market is still relatively weak in Foshan compared to that in Guangzhou, Shanghai and Beijing. With the development of business districts and the improvement of business environment in recent years, some high-end consumers have gradually turned back to the local market and some well-known brands have started to pay attention to the city and its consumers.

It is worth noting that a project run by a European outlet shopping mall – ‘Florentia Village’ was launched in November 2013 and is expected to open before the Spring Festival of 2015. This large-scale comprehensive shopping centre is the first high-end Italian style outlet village in southern China. By the time it opens, there will be more than 250 top brands available within it such as LV, Prada, Gucci and Coach. After the opening, the outlet has the potential to attract not only local luxury consumers, but also those from Guangzhou, Shenzhen, and even Hong Kong and Macau.

However, the actual development of the luxury market in Foshan principally depends on the proportion of high-end white-collar consumers as they are main contributors to luxury market in China. Because Foshan is principally focused on the manufacturing and processing industries, rather than the modern service and financial industries or the retail services industry, there are a relatively low number of white-collar workers, especially wealthy ones, when compared to Guangzhou, Shanghai, Hangzhou and other cities. Without this solid support of white-collar consumer group, the high-end market in Foshan is potentially unpredictable.


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