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Jun
2015

City Report Zhengzhou

Located in North-central China and south of the Yellow River, Zhengzhou is the capital and largest city of Henan province and is one of the Eight Great Ancient Capitals of China. It also serves as the political, economic, technological, and educational centre of the province. Due to its strategic location in one of the most populous areas in the world (nearly 97.1 Million people in Henan alone) and in China’s railway, road and aviation transport networks, the city is increasingly attracting domestic and international investment as well as migrants from other areas of the country, transforming it into one of the largest economic centres in China.

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Economy

Zhengzhou is the second largest city in central China after Wuhan, and had a GDP of 554.7 Billion RMB in 2012, that increased 12.0% compared to 2011, placing it 20th in the GDP ranking of cities in China. The city’s staple industry is aluminum. Other manufactured items include textiles, foods, automobiles, the high-tech industry, electrical equipment and cigarettes. Futures trading also contributes significantly to the economy. Established in 1990, the Zhengzhou Commodity Exchange is one of the three futures exchanges in China which is under the vertical management of China Securities Regulatory Commission. Retail sales of consumer goods in 2012 was 325.4 Billion RMB, a 15% year on year growth and the average spend per person of Zhengzhou citizens was 16,779 RMB, growing by 14.9%.

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Government policy

In June 2012, the Zhengzhou Government launched a series of policies to develop the Erqi business circle into a ‘National trade centre’. In order to achieve this goal, it established 11 projects, with a total investment value of 19.34 Billion RMB, that are now or will be under construction. After completion by the end of 2016, the business circle will contain large shopping malls, 5A office buildings and high-grade residential properties. and will become the largest and most influential high-end commercial area in the centre of China.

Luxury retail distribution

Erqi business circle, Bishagang business circle and Huayuan Road business circle are three main business areas that to contribute to the Zhengzhou economy. Among them, the Erqi business circle used to be the symbol of enterprise in the centre of China two decades ago. Circumstances changed with the passing of time, but the area remains the busiest commercial zone in Zhengzhou. Within a radius of 2 km, the area contains 23 large retail malls, 8 large hotels and catering enterprises in addition to the Dennis Renmin Road Department Store housing a large number of luxury brands.

Located in the west of the city, the Bishagang business circle houses many public facilities such as public parks, museums and the municipal government, with hospitals and universities surrounding it. It’s the major entertainment and leisure venue for people who live in the west of the city. The most sophisticated shopping mall in the city, Yuda FUFU Shopping Plaza is located here.

City Report-Zhengzhou

Dennis Department Store (Renmin Road store)

Dennis Renmin Road Store is a detached retailing building opened in 1997, covering 24,928 sqm across 7 floors. After renovation upgrades in 2009, the store introduced a number of international brands and targeted high-end consumers. Current luxury tenants are Gucci, Ferragamo, Cartier, Max&Mara, Armani, Bally, Coach, Canali, Montblanc, Hugo Boss, Vacheron Constantin, Omega, Rolex, Tag Heuer, Zenith, Panerai, and Hermes Watch.

Yuda FUFU Shopping Plaza

Located in Bishagang business circle near the Zhengzhou Government Building, Yuda International Trade Centre consists of twin towers: a modern 5A office tower and a luxury five star hotel. Yuda FUFU Shopping plaza is the most important part of the centre, taking up the first to third floors of the building, and a total area of 13,832 sqm.

Top brands in the Plaza include Louis Vuitton, Burberry, Tod’s, Versace, Ermenegildo Zegna, Boss, MaxMara, Givenchy, Vertu, Bvlgari, Jaeger-LeCoultre, Piaget, Montblanc, Girard Perregaux, Bell&Ross and IWC.

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Consumer attitudes

Compared to other second-tier cities, the Zhengzhou economy has developed relatively slowly. As a result, although the numbers of luxury brands entering the city is increasing, the overall number is still small. According to the Henan Modern Enterprise Management Institute, local white-collar workers are willing to go to Hong Kong to buy product or purchase them via a Daigou, in order to save money. Local luxury goods consumers can be characterised as having some of the following attributes:

  • Individual monthly income over 10,000 RMB
  • Senior management staff in enterprises with good benefits
  • Small business owners
  • Having a car worth more than 300,000 RMB
  • Use high-end cosmetics for many years
  • Frequently update their electronic products
  • Professional managers, lawyers, accountants, auditors, etc.
  • Executives of a monopoly industry, such as the power, gas, or telecommunications companies, postal services, banks, etc.
  • Government officials in divisional roles or equivalents

Editor’s view

According to Fortune Character ‘2012 China Luxury Report’, within the Chinese urban luxury development index and consumer activity ranking, Zhengzhou only ranked 26th and 28th. However, in the attractiveness ranking amongst luxury brand’s, Zhengzhou ranked 10th.

It is obvious that as the luxury market in the first-tier cities and the coastal cities has gradually stabilised, combined with the overall slowdown in China’s luxury market, luxury brands have begun to focus on second and third tier cities like Zhenzhou to expand and develop new markets.

However, due to being in relatively close proximity to Wuhan which is the most important city in the luxury sales network in the centre of China, Zhengzhou has always lacked their attention in the past as few luxury and high-end brands have chosen to enter the local market.

But with its economic development, top brands such as LV, Gucci, and Armani. that have established in Zhengzhou have made good profits. Not to be ignored, one of the domestic high-end retail mall leaders, the MIXC started building in 2010, and is expected to attract many international luxury brands to the city in 2014 when the mall opens.

With greater recent attention from the industry, the luxury market in Zhengzhou is likely to stimulate potential purchasing power and accelerate the development of the entire luxury sector in Henan.


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