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Jun
2015

City Report Guangzhou

As the capital city of Guangdong Province, Guangzhou is the centre of economic, cultural, technology, education and the main transportation hub in the South China. It was a foreign treaty port with the largest coverage and longest history in China. Located in the South of China and North of Pearl River Delta, Guangzhou neighbours Hong Kong and Macao cross the South China Sea. Being the third largest city in Mainland China after Shanghai and Beijing, Guangzhou was awarded the title of ‘The city with the best commercial values’ by Forbes in 2010, and that with the best quality of life in Mainland China in the Report of Quality of Urban Life Index 2011, jointly issued by the institute of economy of Chinese Academy of Social Science and Capital University of Economics and Business.

Economy

In 2011*, the total industrial output value of Guangzhou was 1,571.27 Billion RMB, a 12.7% year on year increase. The light and heavy industries attained the total output value of 554.85 Billion RMB and 1,016.41 Billion RMB respectively, an 18.8% and 9.6% growth when compared to 2010. The automotive industry, petrochemical manufacturing and electronic product manufacturing are the three major industries, generating a total value of 757.51 Billion RMB in 2011, representing 48.2% of that of the overall city.

The total retail sales of consumer goods in Guangzhou was 524.3 Billion RMB in 2011, a year on year increase of 17.1%; and the total sales of commodities increased 27% to 2,693.5 Billion RMB. The income and consumption of local urban residence has increased steadily during 2011. The per capita disposable income was 34,438 RMB, a 12.3% year on year growth; the nonproductive expenditure per capital was 28,210 RMB, up 12.8%, and the per capita income from salaries increased to 28,956 RMB, representing 72.1% of a family’s income.

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Government policy

During the twelfth five year period, policy aimed to develop a modern service industry and perfect a modern market system, to building a commercial and trade environment to international standards. The plan also aimed to further enhance commerce and trade, conventions and exhibitions, modern logistics, finance service’s and high-end business to establish an international commerce centre with a strong global influence.

Luxury retail distribution

At the end of 2012, there were 57 large shopping centres in Guangzhou. The Tianhe district of the city is where many luxury brands and consumers are concentrated; as they live and work in this area. Over ten shopping malls and department stores are located in this prime commercial zone, including the luxury shopping mall TaikooHui, which contains over 200 luxury and premier brands, La Perle Plaza and Happy valley.

TaiKooHui

Opened in 2011, TaiKooHui is a large-scale multi-faceted complex in the thriving heart of the Tianhe Central Business District, developed and managed by Swire Properties. Covering a floor area of approximately 358,000 sqm (exclusive of the cultural center), it incorporates a prime shopping mall, two office towers, a cultural center, the first Mandarin Oriental Hotel in Guangzhou, and serviced apartments. TaiKooHui is likely to become one of South China’s most iconic landmarks and a social, shopping and lifestyle destination. Many luxury brands have established a presence in TaikooHui including Bally, Brioni, Burberry, Chanel, Bvlgari, Dior, LV, Miumiu, Piaget, Mont Blanc, Panerai, Sergio Rossi, Prada, Fendi, Hermes, Giorgio Armani, Salvatore Ferragamo, and Versace.

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La Perle Plaza

La Perle opened in January 2004, it is situated in Guangzhou’s bustling commercial area, Huan Shi Dong Road. Within it can be found many prestigious luxury brands, including Louis Vuitton, Hermès, Gucci, Dior, Dior Homme, Fendi, Céline, Emporio Armani, Ermenegildo Zegna, Salavatore Ferragamo, Dolce&Gabbana, Valentino, Versace, Saint Laurent, Etro, Vertu, Daks, Canali, Hugo Boss, Juicy Couture, TruTrussardi, and Cerruti 1881, and became the shopping center containing the largest number of top luxury brands in South China.

The mall has established a VIP member club that currently has more than 8000 card holders. Since it was established, the club has tried to respond to members’ requirements, provide personalised premium services, including VIP reserved car parking, dedicated washrooms, mobile customer service, and a members’ business information platform. Meticulous service has made La Perlea model of a luxury shopping experience center in Guangzhou.

Happy valley

Opened in Septmber 2012, Happy valley covers 150,000 sqm over 8 floors above ground and 4 floors in the basement. Positioned as fashionable and high end, Happy valley is a one-stop experience integrating fashion, shopping, catering and entertainment, with 5 core functions including a department store, super market, cinema, catering and luxury products from brands such as Gucci, Prada, Burberry, Fendi, Versace, Dior, Armani, Cartier, Rolex, Omega etc.

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Consumer attitudes

The reform and opening policy initially implemented in the Southern region of China, in Guangzhou and Shenzhen, initiated the earliest generation of rich Chinese and private business owners in the country. As a neighbour to Hong Kong, Macao and Taiwan, local people have cultivated their experience to become pioneers of luxury in Mainland China. Their understanding of brands is well developed, and not only do they understand which one matches their identity and status, but also have accepted new brands and products very quickly.

The main luxury consumer group in Guangzhou is still middle aged people who have rich working and social experience, and significant wealth. Their pursuit of life quality results in their personal consumption of luxury goods. It is worth noting that many highly educated local luxury consumers have a high requirement on luxury goods; not only that they meet their material demands but also the spiritual their needs. Conspicuous consumption of luxury is not prevalent in Guangzhou, but is based on an increasing demand on life quality and personal taste.

Editor’s view

As one of the most developed cities in China, the luxury market in Guangzhou has not developed as quickly as other comparable locations. Relatively, there are few high end shopping malls and department stores, and the major luxury brands have also been very controlled with their expansion strategy in Guangzhou. It is widely believed in the industry that this pragmatic approach to luxury and the geographic proximity to Hong Kong and Macao have limited the development of local luxury market.

It is customary for Guangzhou consumers that shop in Hong Kong, especially for luxury products. In addition, the purchase power of consumers in the surrounding cities including Shunde, Dongguan and Foshan, has made a very limited contribution to the luxury market in the city. Hong Kong has traditionally been a magnet to the Guangzhou luxury consumers with its brands, price superiority and new styles. According to data from Deloitte, almost 70% of luxury consumers are inclined to purchase luxury in Hong Kong, Macao and Taiwan, 50% of local luxury consumption occurs in the market outside Guangzhou.


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