4 Sept 2015
Jiaxing: Profile of a Consumer Market
1. Economic Overview and Development Planning
Situated in the northeastern part of Zhejiang province on the Hangzhou-Jiaxing-Huzhou Plain, Jiaxing is one of the major cities in the Yangtze River Delta (YRD) region. In 2014, the GDP of Jiaxing amounted to Rmb335.3 billion, a rise of 7.5% over the previous year. The value-added of the primary industry was Rmb14.5 billion, down 0.2%; the value-added of the secondary industry reached Rmb181.1 billion, up 7.8%; and the value-added of the tertiary industry amounted to Rmb139.5 billion, up 8%. Calculated on the basis of its permanent population, Jiaxing’s per capita GDP was Rmb73,462. The five counties under Jiaxing are all listed among the country’s top 50 in terms of comprehensive strength and are all branded “the affluent counties of Zhejiang province”.
Traditional industries with advantages in Jiaxing include textiles, garments, chemical fibres and leather. In recent years, positive efforts have been made to develop equipment manufacturing, high-tech industries, port-based heavy industry and chemical industry. Of the total industrial output from enterprises above a designated scale, the share of heavy industry surged from 45.6% in 2008 to 52.4% in 2013. In 2014, for total industrial output from enterprises above a designated scale strategic emerging industries accounted for 39.6%, high-tech industries 38.2% and equipment manufacturing 24.3%. The share of R&D expenditure in the city’s GDP also increased from 2.0% in 2009 to 2.65% in 2014.
Exports from Jiaxing are dominated by machinery and electronic products, garments and textile products. Of the city’s total exports, machinery and electronic products account for 32.9%, garments 17.9% and textile products 12.7%. Jiaxing is an export-oriented economy, with imports and exports making up 61.8% of its GDP.
As of the end of 2014, there were 86,473 private enterprises in Jiaxing, a rise of 15.4% from the previous year. As of the end of 2013, the GDP generated by the private sector accounted for 63% of the city's total.
A total of 327 commodity trading markets operate in Jiaxing. Their total transaction volume soared from Rmb67.4 billion in 2009 to Rmb149.3 billion in 2014, representing an annual growth rate of 16.5%. Jiaxing has seen the establishment of a number of commodity trading markets famous across the province or even the whole country, including the Haining China Leather City, Honghe Woolen Sweater Market, Puyuan Woolen Sweater Market, China cocoon and silk trading market and Jiashan Fenhu metal materials trading market.
The City-Level Industrial Development Plan of Jiaxing adopted at the end of 2014 affirmed the "4+5" structure of dominant industries in the city, including the four advanced manufacturing industries of electronic information products, advanced equipment manufacturing, new energy and fashion industry, and the five modern services of technology service, modern logistics, financial service, e-commerce, and cultural tourism and health service. In tandem with the elimination of backward capacity and the establishment of access requirements, these will help raise the standards of Jiaxing's industries.
Jiaxing will focus on development based on the ‘one core, one belt and two areas’ model. ‘One core’ refers to the core business district with the service industry as a pillar. As this core business district also covers the old city area within the Second Ring Road, urban renewal will be carried out to improve the city environment and appearance and achieve a concentration of commerce, technology, culture, tourism and other modern services. ‘One belt’ refers to the northern ecological tourism belt formed by rivers, wetland, woodland, hot springs and other rich resources to the north of Jiaxing city. Efforts will be made to develop commercial services and improve infrastructure and tourism services here. ‘Two areas’ refers to the eastern and western industrial functional areas dominated by the integrated development of industry and services. Here, efforts will be made to promote industrial innovation, transformation and upgrade at the city level, increase Jiaxing's industrial competitiveness, give further leverage to the resource advantage of Jiaxing as a core city and stimulate economic development in the surrounding counties and cities.
2. Jiaxing’s Consumer Market
2.1 Growth in Retail Sales
In 2014, Jiaxing’s total retail sales of consumer goods reached Rmb134.7 billion, up 12.5% over the previous year. Meanwhile, retail sales in the accommodation and catering sectors amounted to Rmb13.2 billion, representing a growth of 9.9%.
2.2 Per Capita Disposable Income and Consumption Expenditure
In 2014, the per capita disposable income of urban households in Jiaxing was Rmb42,143, while the per capita consumption expenditure was Rmb23,032.
Between 2005 and 2013, urban households’ ownership of most consumer goods in Jiaxing showed an upward trend. This is particularly so for products affordable and favoured by the middle class, such as cars, computers, air-conditioners and mobile phones.
3. Characteristics of Jiaxing’s Consumer Market
3.1 Population Structure
Jiaxing had a permanent population of 4.56 million in 2013, a rise of 13.7% over 2005. There was only a population of 3.46 million with household registration, which means that the city has attracted a large migrant population.
According to China's sixth population census, there were 1.45 million households among Jiaxing's permanent population in 2010, with an average 2.88 persons in each household, representing a drop of 0.5 persons from 10 years earlier.
Among the permanent population, 50.4% were males; 11.9% were aged between 0 and 14, 73.1% were aged between 15 and 59, 15% were aged 60 and above, of which 10% were aged 65 and above. Among the permanent population 7.7% had received education at university level, 11.8% had senior high school education, 39.7% had junior high school education and 29.2% had primary school education. Compared to the results of the fifth population census 10 years earlier, the number of people in Jiaxing who had received university education had risen from 2,229 to 7,676 in every 100,000 people.
3.2 Characteristics of Consumers
Among the 11 prefectural-level cities in Zhejiang, Jiaxing is reputed for being a fertile land of fish and rice and a capital of silk. Adjoining Shanghai on its east, Suzhou on its north, Huzhou on its west and Hangzhou on its south, Jiaxing is less than 100 km away from these cities. It is highly accessible by railways, highways and water transport.
Whenever the specialty produce of Jiaxing is mentioned, the zongzi rice dumpling immediately springs to mind. Zongzi epitomises the characteristics of Jiaxing people, who are rules-compliant, united and cultured. Jiaxing people look relatively plain as the zongzi on the outside, but are in fact full of good attributes within. The city has always served as a midway settlement, linking up Shanghai and Hangzhou; it takes just half an hour to travel by high-speed rail from Shanghai to Jiaxing. It has now evolved from the ‘back garden’ of Shanghai to become the ‘central garden’ in the YRD. In Jiaxing, there are three broad types of consumers: the rational, the avant-garde and the conservative.
The group of rational consumers encompasses government employees, private enterprise owners, teachers and white-collar workers in foreign-invested enterprises. They are relatively well-off, well-bred and embrace broad horizons. With these characteristics, they are rational in their spending habit and put much emphasis on the quality of life. They are not price-sensitive and have relatively high brand awareness. Some of them stay with the several brands of their choice. Owing to Jiaxing’s unique geographical location, these consumers often drive to Shanghai or Hangzhou to seek branded merchandise not available in their local shopping malls.
Avant-garde consumers includes young people of the post-1980s and 90s generations, such as university students and the second generation of the rich. They think in an avant-garde fashion and are free from any family burden. Some come from very wealthy family backgrounds. With regard to their spending habits, they seek carefree, exciting and materialistic enjoyment and are ready to spend lavishly.
The conservative consumers are mainly the local working class and the general public. In terms of numbers, this group is the biggest among the three types of consumers. Consumers in this group are relatively price-sensitive because of their financial constraints. They often compare prices and generally opt for the mid- to low-end local brands.
Conservative consumers also include Jiaxing's growing senior population. As of the end of 2014, Jiaxing had over 800,000 people aged 60 or above, accounting for 23.3% of the city's total population. The trend of aging population means there is considerable room for the expansion of the senior market. Consumption by senior citizens mainly focuses on medical treatment and healthcare products, but there are also new consumer demands, such as recreation, leisure and tourism. Since older people are more traditional in their spending concept, Jiaxing's senior market is still in the early stage of development.
4. Profiles of Jiaxing’s Major Commercial Districts
Zhongshan Road commercial district is located around the intersection of the north-south running Hexing South Road and the east-west running Zhongshan East Road. Zhongshan Road is one of the busiest streets in Jiaxing, commanding unique advantages. It is characterised by the presence of a full range of trades and functions, where shopping, dining, tourism, leisure and entertainment services, as well as financial and commercial services are offered. It is also an area marked by a great number of commercial outlets and bustling activities, and stands as icon of the city, with strong clustering effects and great influence. Major department stores, including Jiangnan Building and Diamond Shopping Center, are located here.
The Jiangnan Building is the largest shopping mall in Jiaxing, with a retail area of 25,000 square meters. It is mainly used for the sale of modern general merchandise and supermarket operations. Integrating diversified functions and trades, this modern shopping mall houses department stores and chain supermarkets, also featuring daily agricultural products exhibitions.
Diamond Shopping Center is a major modern commercial and trade centre in Jiaxing, covering a business area of 18,000 square meters. It deals mainly in garments, jewellery, household appliances and general merchandise, targeting the mid- to high-end markets.
Cifi Jiaxing Plaza is situated in the busy city centre, enjoying good accessibility and boasting a full range of support facilities. A number of trendy catering outlets and independent branded shops are expected to open for business here. The Plaza is set to become a high-end residential, shopping and leisure activities centre. Ludu Shopping Mall (鹿都購物廣場) will officially open in 2015.
Jiangnan Moore City
This commercial district is located within Jiaxing’s Xiuzhou District, with a planned shopping mall space of 200,000 square meters and business space of 100,000 square meters. The shopping mall will integrate modern business with commercial services, such asa sight-seeing and tourism, and be built into a one-stop ‘shopping paradise’, where shopping, catering, leisure and entertainment services, business functions, cultural and tourism services are offered. The cluster of establishments here includes Rainbow Department Store and many supermarkets, restaurants and cinemas.
Other new commercial districts
Southeastern New City - The arrival of Jiangnan Building and Walmart in Zhonggang City (中港城), at the junction of Guangyi Road and Shuangxi Road in Nanhu District, gives the area great development prospects. Construction of Jiaxing Wanda Plaza opposite Zhonggang City is underway and is expected to open for business next year.
Canal New Area - This new area is closest to the city centre of Jiaxing. The Commercial Hub on Wenchang Road and Jiangnan Xintiandi Shopping Mall (江南新天地購物中心) on Zhongshan West Road are expected to open for business in 2015. The Canal New Area should be a commercial district with great future prospects.