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Jun
2015

City Report Ningbo

Ningbo is a seaport city in the northeast of Zhejiang province, located 220 km South of Shanghai and a major export hub for electrical products, textiles, food, and industrial tools. Holding sub-provincial administrative status and separate state-planning status, according to the 2010 census the municipality has a population of 7.6 Million, approximately 3.5 Million of whom reside in the urban area which comprises of 6 districts. It lies south of the Hangzhou Bay, facing the East China Sea.

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Economy

Ningbo is the second-largest city in Zhejiang, and also one of China’s first coastal cities that opened to the outside world. Although Ningbo is not a capital city, the GDP is high when compared with other cities. It achieved a total industrial output value of 652.4 Billion RMB in 2012, ranking it 17th in China. Petrochemicals, textiles and machinery are the three mainstays of industry in Ningbo, and other industries include metallurgy, electronics and building materials. The total retail sales of consumer goods grew 15.3% in 2012, reaching 232.95 Billion RMB. The residents of Ningbo are relatively wealthy, and an average annual income per urban resident reached 37,902 RMB, an increase of 11.3%. The annual consumption expenditure per capita is 23,288 RMB, an increase of 6.9%.

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Government policy

The establishment of the Shanghai Free Trade Zone, which is the first one in Mainland China, has accelerated the speed of other coastal cities applying for a Free Trade Zone status, such as Guangzhou, Tianjin, Shandong, Jiangsu, Zhejiang and Xiamen. As the world’s largest cargo port, Ningbo-Zhoushan Port has great advantages in its own application for such a status.

Luxury retail distribution

The main commercial districts in Ningbo can be divided into the following three areas:

Sanjiangkou commercial district is the main business centre of Ningbo. It includes Jiangdong district, which is based around commercial offices, and includes cafés, bar and business catering, Jiangbei district, which is an area of international cuisine, hotels and business clubs, and Haishu district, which is the base of luxury goods retailing and one-stop shopping malls.

East Xincheng commercial district: aims to be international, emphasizing modern services that focus on finance, trading, exhibitions and traveling. It is an important public life and travel centre in Ningbo.

Yingzhou Wanda commercial center: developing upscale department stores, furnishing retail and culture-fashion clubs, and has now become a landmark of fashion in Ningbo.

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Ningbo Heyi Avenue Shopping Center

Located in Haishu district, Ningbo Heyi Avenue Shopping Center was launched as a three floor shopping mall covering 35,000 sqm in September 2009. It is the top shopping mall in Ningbo, where lots of luxury brands gather. Within it are about 110 well-know international brands, including: Bally, Bvlgari, Burberry, Louis Vuitton, Cartier, Armani, Zegna, Dunhill, Ferragamo, Dior, Gucci, Versace, Mont Blanc, Omega, Rolex, Vacheron Constantin, AudemarsPiguet, Franck Muller, Coach and Paul & Shark.
The third Hermes store in Zhejiang also opened in Heyi Avenue Shopping Center on 18th September this year.

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Jinguang Shopping Center

Opened in April 1998, Jinguang Shopping Center is located in Jiangdong district. It was the first high-end department store to house a number of worldwide famous brands. But due to the opening of the Heyi Avenue Shopping Center, the Jinguang Shopping Center gradually downgraded to a mid/high-end department store. It retains a few luxury brands like Cartier, Dunhill, Rolex and Omega.

Consumer attitudes

Wealthy consumers in Ningbo know much about luxury. They are not only clear about the history of luxury brands, but they know which products are core to the brand. They are also more mature than general middle class luxury consumers.

It is considered by others that the reason the Ningboness choose to have luxury goods is not for their status, but for a favor. Certainly, the motivation of business use and gift giving is still strong here.

Speaking generally, Ningbo is a market that has huge potential for sales of luxury goods. An increasing number of private enterprises is likely to be the guarantee of it.

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Buying up not buying down

The price of luxury goods has been rising in recent years. But to Mr.Bao a resident of Ningbo and an engineering contractor, the rising price is good in his eyes “The price rising proves that the product is worth buying.” He was quoted having just bought a Vacheron Constantin watch.

From Wenzhou to Ningbo

In addition to Ningbo natives, consumers around Ningbo also contribute a lot to the luxury market in the city, even those from Wenzhou which is farhow far? away from Ningbo. Although Wenzhou has attracted a large number of luxury brands to set up in the city centre in recent years, the number is relatively small. Shanghai and Hangzhou are far away, so with the advantage of high-speed trains, more Wenzhouness are willing to go to Ningbo to shop.“We go to Ningbo in the morning, and come back at night. Compared to Shanghai, the shopping cost will be lower.” According to Ms. Pan, a foreign enterprise employee who goes shopping in Ningbo several times a year.

Editors view

Why do luxury sales in Ningbo, a second-tier city surprised luxury experts?
Firstly, Ningbo is a well-developed foreign trade port city, so the private enterprise owners have more opportunity to make contact with foreign businessmen, and as a result are aware of luxury brands and goods earlier than others. The second is that as the better developed the city has become with thousands of private companies, there may be as a result more business gifting of luxury goods that contribute to the market size and growth.

How extensive is the luxury market in Ningbo?
Other than mainstream luxury brands such as Vacheron Constantin and Cartier, customers can also buy luxury furniture valued at hundreds of thousands RMB, luxury cars valued in Millions of RMB and villas worth tens of Millions of RMB. Taking all these products into consideration, the luxury market is estimated to be almost ten Billion RMB.

In July, the ‘2013 International Exhibition of Top-level Customized PersonalItems’ ran in Ningbo. Other than aircraft, yachts, cars from Aston Martin, Rolls-Royce, Bentley and other brands familiar to the Chinese, there were many others not seen in China before. The inclusion of those these exclusive luxury brands demonstrates that Ningbo has an increasingly important position in the Chinese luxury map.


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