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Jun
2015

City Report Hangzhou

Hangzhou is the capital of Zhejiang Province and is the provincial center of economics, culture, science and education. It is a historically and culturally famous city and also an important national tourist destination known for its beautiful scenery. Located at the southern end of the Yangtze River Delta, the west end of Hangzhou Bay, the lower reaches of Qiantang River and the southern end of the Grand Canal (Beijing-Hangzhou), it is an important transportation hub in southeast China. At the end of 2011, the population of long-term residents in the city was 8.738 million,  an increase of 32,600 over the previous year, of which the urban population is 64.5 million, accounting for approximately 74% of the total.

 

Economy

In 2011, Hangzhou completed full implementation the twelfth five-year plan. The GDP of Hangzhou exceeded 700 Billion RMB, up by 10.1% over 2010. The GDP per capita (calculated by permanent residents) was 80,395 RMB. According to the World Bank income group classification, Hangzhou is equivalent to that of a moderately developed country.

At the end of the same year, there were 22 enterprises among the top 500 state run firms, and 56 private enterprises among the top 500 in the country

Culture and creativity, tourism and leisure, financial services, e-commerce, information technology, advanced equipment manufacturing, the Internet, biomedicine, green and new energy are the ten major industrial sectors targeted for the Hangzhou industrial transformation over the coming years.

 

Government policy

The city aims to implement a strategy to build an innovative and culturally strong Hangzhou. It has yet to define the specifics of the policy, but like many other cities, culture, creativity and innovation are the top of the objectives list. There is a focus on fashion amongst other things, and we may see the development of support for this sector over the coming years.

 

Luxury Retail Distribution

More than 70% of all the top international luxury brands currently in China can be found in Hangzhou. The local consumers have great enthusiasm and strong purchasing power for spending on luxury.

In 1999, the first Hugo Boss store opened in Dalin Street, and in November 2004 LV established a presence in the Hangzhou Tower department store, which became the real starting point for luxury goods sales in the city. In 2005, Hubin Street became a major base for luxury brands in Hangzhou and is now regarded as one of the top three luxury retail locations in China.

In 2010, The MIXC, the first shopping mall in Hangzhou, commenced business with a large number of big-name luxury brands occupying nearly 20,000 square meters. Following Hangzhou Tower and Hubin Street, The MIXC has now become another popular gathering place for luxury consumers.

Hangzhou Tower

Hangzhou Tower is located in the Hangzhou commercial centre; the Wulin commercial hub. It consists of four buildings connected by an indoor footbridge. With a total construction area of nearly 140,000 sqm, it brings together a number of big international brands under one roof. In 2011, total sales in Hangzhou Tower reached 6.3 billion RMB, of which luxury goods contributed to more than 30%. In H2 2012, many of the existing brands resident in Hangzhou Tower will be enlarging and upgrading their stores.

Luxury brands established in the Hangzhou Tower are:
Chopard, Van.Cleef & Arpels, Tiffany & Co, Blancpain, TAG Heuer, Moschino, BCBG, LV, Hermes, Dior, Celine, Gucci, Zegna, Fendi, Loewe, Tod’s, D&G, Salvatore Ferragamo, Dunhill, Hugo Boss, Emporio Armani, Cartier, Bulgari, Mont Blanc, Vertu, Burberry, Givenchy, Chloe, Valentino, Bally, Versace, Balenciaga.

Hubin International Boutique Compound

Located in the scenic Hubin commercial hub close to the West Lake, Hubin Street is the premier shopping district of Hangzhou with 18,000 square meters of retail overlooking the natural beauty of the West Lake. The street is home to over 30 well-known international brands, covering clothing, luggage, jewelry, watches, furs, home, beauty, and western restaurants. Hubin Road is expected to be become a top business and tourist centre, and to play a leading role in fashion consumption over the coming years.

Those luxury brands that can be found in Hubin Street are:
Cartier, Hermes, Gucci, Max Mara, Balmain, Giorgio Armani, Yves Saint Laurent,
Agnona, D&G, Prada, Cerruti 1881, Moncler, Omega, John Lobb, Versace, Ports, Van Cleef & Arpels, Ermenegildo Zegna, Puiforcat, Salvatore Ferragamo, Gieves & Hawkes, Neuhaus and St’ Louis.

The MIXC

The MIXC is located in the Qianjiang new development, which is the new commercial centre of the city, covering an area of 150 acres, with a total construction area of 800,000 sqm. The MIXC brings together most of the worlds top tier brands. The 1,880 sqm LV flagship store is one of the world’s largest LV stores. Prada and MiuMiu stores are more than 1000 sqm in size, and the Cartier flagship store covers an area of more than 500 sqm.

In addition, there are over a further 100 global brand stores each taking up between 50 and 150 sqm, these include: Fendi, Dior, Salvatore Ferragamo, Max Mara, LV, Emporio Armani, Prada, Balenciaga, Boss Black, MiuMiu, Escada, Paul & Shark, Y-3, Coach, Mont Blanc, Cartier, Piaget, Ports, Durban and Tommy Hilfiger.

Long Yun Ge in the Dragon Hotel

Located in the Dragon Hotel, a well-known five-star hotel in Hangzhou, Long Yun Ge is funded and operated by the Dragon Hotel, Hangzhou Tower and Hengdeli Group over a total area of 1370sqm.Operating as a club house, Long Yun Ge only contains watch and Jewellry brands.

The watch zone includes IWC, Yakedeluo, Bulgari, Zenith, Glashütte, Bovet and Blancpain, jewelry brands include Damiani, Pomellato and Boucheron.

Xiaoshan International Airport T3 terminal

The second phase of the Hangzhou Xiaoshan International Airports about to be completed at the end of 2012, and is expected to attract many luxury brands within the 10,000 sqm of retail. Those that have already agreed to take space are: Armani, Salvatore Ferragamo, Mont Blanc, Hugo Boss, Gianni Versace, Tumi, Ralph Lauren, TOD’S, Cerruti 1881, Kent & Curwen and La Mer.

 

Consumer attitudes

Luxury consumers in Hangzhou include local residents, employee’s of foreign enterprises based in the city, middle, upper middle and wealthy people from neighboring cities such as Ningbo, Wenzhou, Shaoxing, Xiaoshan, Taizhou and Yiwu, tourists and workers from outside Zhejiang province. These consumers have a relatively high social status, good educational background and high financial strength. They all tend to be pursuing a life of quality, and are therefore the corner stone of Hangzhou’s luxury goods market.

 

Editors view

A highly developed private business sector in Zhejiang has created strong purchasing power amongst the citizens particularly for luxury goods. According to a 2011 report by the World Luxury Association, Hangzhou ranks fourth in the Mainland, after Beijing, Shanghai and Guangzhou for luxury goods. The city report of China Luxury Consumption 2010-2011 indicated that Hangzhou, Wenzhou and Qingdao are ranked the top 3 in the luxury market in terms of the local luxury purchasing power.

Our experience would allow us to reveal that most of the luxury brand sales in Hangzhou are ranked first in the country. For example, in the Hangzhou area sales of luxury cars are typically the best across the country, and many top car brands such as Bentley, Ferrari and Porsche were established in Hangzhou some years ago. Porsche for example, typically achieves annual sales of more than 500 cars in Hangzhou. High-end cosmetics, fashion, furniture and property sales also move in very high volumes.


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