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City Report Qingdao

Located at the southern end of the Shandong Peninsula, Qingdao currently serves as the chief economic powerhouse of the province. As a key economic center and port city in China, Qingdao is famous for its cultural heritage and picturesque scenery. In 2011, the Economist Intelligence Group listed Qingdao as 98th in the world’s top 100 most livable cities. Recently, Qingdao was ranked first as the happiest city in China in 2012. In its12th five-year plan, Qingdao aspires to become a world-class livable city with better integration of the population, industry and environment.

Since the 2008 Beijing Olympics, when the Qingdao International Sailing Centre was built, the city has positioned itself as the sailing capital of China. Through a series of high-profile sailing events, including the Qingdao International Sailing Week, International Extreme Sailing Series and the Clipper Round the World Yacht Race, the city aimed to create greater awareness and attract boat companies. All as part of the government’s commitment to the “blue”, i.e. maritime, economy.

The province of Shandong is also renowned for the production of alcoholic beverages. Qingdao is the site of the Tsingtao Brewery, the producer of a Chinese beer brand that has achieved worldwide fame. In addition to beer, Qingdao is home to Haier and Hisense, two of China’s best-known electronics manufacturers. Manufacturing more than just home appliances, Qingdao is also very well established as a centre for fashion, jewellery and high speed trains.


The economy

Taking advantage of its natural port, Qingdao has traditionally been one of China’s international trade centres. According to the municipal government, the city’s imports and exports continued to grow in 2011 with a total value of US $71.26 Billion, an annual increase of 27.2%.

Considered by Forbes to be one of the top 25 places for business in China, Qingdao recorded a GDP of RMB 662 Bn (US $105 Bn) for 2011, up 11.7% year on year, with its per capita GDP exceeding US $10,000 for the first time. In addition, urban residents’ per capita disposable income in Qingdao reached RMB 28,567 (US $4,517), a 14.3% per cent increase from a year earlier.


Government policy

According to government data, in 2011 Qingdao approved 92 new foreign investment projects with a total investment value of US $507 Million. The city also signed 33 new contracts involving projects with foreign firms, with a total turnover of US $1.29 Billion, up 30.8% year-on-year.


Luxury retail distribution

Qingdao is at the forefront of luxury consumption in Shandong Province, with a rapidly developed luxury market, attracting many luxury brands. Luxury consumption in Shandong Province in 2010 accounted for 13.5% of the total market of Mainland China, 69% of which was from Qingdao. Qingdao is regarded as an important target by large luxury brands expanding into tier two cities. According to Quyang Kun, the Chairman of the World Luxury Association, more than 80% of the luxury companies are willing to open the first flagship store of Shandong region in Qingdao.

The eastern commercial hub in the Chengnan district centered on Hong Kong Road is the heart of Qingdao, which is the fastest growing business district and key luxury market, bringing together the world’s top brands and commercial buildings. After 11 years of development, there are now three high-end department stores; Hisense Plaza, the Sunshine Department and Plaza Printemps.

Plaza Printemps

The earliest high-end department store in Qingdao, located in the downtown business center, adjacent to the luxury hotels and financial institutions. Plaza Printemps has attracted many international brands, including Vertu, Burberry, Armani, and Dunhill. Printemps increasing consumer base includes those from the surrounding cities of Weifang, Yantai, Weihai, Zibo, Linxi, and Dongying.

The Sunshine Department Store

Qingdao Sunshine department store was opened in 2003 and is located in the political and financial centre of the city, Hong Kong Road, a prime location in the city. The focus of the department store is high-end fashion, health and leisure, and resident brands include Gucci, Chanel, Dior, A.Testoni, Bally, MaxMara, Coach, and Paul & Shark.

Hisense Plaza

In the late 1990s, Hisense Plaza was the first high-end department store to open in Qingdao. It was refurbished and reopened in 2008, and earned the title ‘Asia’s most beautiful department store’. Hisense Plaza has adopted a business model that combines a top department store and shopping mall. Under its roof are 80% of the international luxury brands currently in China, such as LV, Hermès, Prada, Cartier, Gucci, Burberry, Armani, and Versace. In 2010, Hisense Plaza achieved the total sales volume of 1.35 billion RMB that increased to 1.9 billion RMB in 2011.


Consumer attitudes

The overall consumer groups of luxury goods in Qingdao include the rich second-generation, high-level white-collar workers (with an annual salary of 100,000 RMB) and business owners. Currently, luxury consumption is greatly dependent on the generation born in the 1980’s.

In recent years, high-end consumer groups in Qingdao have become younger; the average age of Qingdao mainstream luxury consumers is between 23 and 32 years old, being much lower than those in other Chinese cities or internationally. However, unlike a some years ago, young luxury consumers are no longer only obsessed with well-known luxury brands and would like to choose brands more suitable their own age and temperament.They have become more rational, and focus on fashion, perfume, watches and leather products.


Editors view

On 20th September 2012, Bottega Veneta opened the first store in Qingdao Hisense Plaza. As a representative of “low-key luxury” the appearance of Bottega Veneta in Qingdao also indicates a trend within the local luxury market. After many years of obsessing with big luxury brands such as LV, consumers in Qingdao are becoming more selective and knowledgeable rather than just buying the most expensive one.

According to staff at a high-end department store in Qingdao ‘there is a clear change in the consumption pattern amongst the luxury consumers who now want to be different and pay greater attention to the brands that suit themselves, rather than logo’s and brands that have been very popular over the past decade’. Also according to staff at the Hisense Plaza, although LV, Gucci, Prada, Hermès, Cartier and Zegna are the most popular luxury brands with highest recognition in Qingdao, more and more consumers in the Plaza are turning their attention to those lesser-known luxury brands.


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