22 Sept 2015
Nantong: Profile of a Consumer Market
1. Economic Overview and Development Planning
Nantong is one of the 14 coastal cities in China that were first opened to foreign investment. Its GDP is the fourth largest among the cities of Jiangsu province, after Suzhou, Wuxi and Nanjing. In 2014, its GDP reached Rmb565.3 billion, with a year-on-year real growth of 10.5%. The per capita GDP of its permanent population was Rmb77,457. Industry is a major economic sector of the city, contributing some 51% to its GDP. The gross output value of its industrial enterprises above a designated scale in 2014 grew by 11.2% over that of the previous year to Rmb1,261.4 billion, with 47.5% being contributed by the equipment manufacturing industry.
Nantong has a vibrant private sector. In 2014, 18,100 private enterprises were newly set up in the city, making up a cumulative total of 227,000. Altogether, there were 3,705 private industrial enterprises above a designated scale in 2014, accounting for 74% of Nantong’s total. During the year, the value-added of private industrial enterprises reached Rmb175.42 billion, accounting for 61.2% of the total value-added of the industrial enterprises above a designated scale in the city.
Nantong is situated at the southeastern part of Jiangsu, with Shanghai and Suzhou just across the river. Since the opening of the Suzhou-Nantong Bridge and Chongming-Qidong Bridge, Nantong and Shanghai are only one to two hours away by car, drastically reducing the journey between the two cities. With the growing convenience in transportation, Nantong’s integration with Shanghai and South Jiangsu region as well as its pace of economic development have been significantly enhanced.
In terms of urban planning, during the 12th Five-year Plan period Nantong has adopted a ‘one principal district and three sub-districts’ layout. The principal district is the city proper, with the three sub-districts of Jinsha Town, Haimen Town and Changjiang Town. Under Nantong City, there are four urban districts, namely Chongchuan, Gangzha, Tongzhou, and the Economic and Technological Development Zone. The layout of the city proper comprises one core and three zones, with Chongchuan District serving as the core with emphasis given to the development of modern commercial services. The three zones are the eastern zone (with Tongzhou urban district and Tongzhou Development Zone as the core), southern zone (with the Economic and Technological Development Zone and the Technology Industrial Park as the development base), and northern zone (with Gangzha District as the cornerstone for the development of a modern logistics park).
In May 2015, the Nantong City Tongzhou Bay River-Sea Joint Development Demonstration Zone was set up. A group of large integrated deep-water ports will be constructed to attract the entry of a number of equipment manufacturing industry players, creating yet another platform for Nantong’s deep integration into the country’s ‘Belt and Road’ and Yangtze River Economic Belt national development strategies, while deepening coastal development and river-sea joint development.
In recent years, thanks to the implementation of the two national strategies of YRD integration and coastal development, the commercial sector of Nantong has entered the prime stage of rapid development. According to the Urban Commercial Network Distribution Plan of Nantong City (2012-2020), Nantong will build three city-level commercial centres (Nandajie city-level commercial district, New City District city-level commercial district, City North New Town city-level commercial district), four district-level commercial centres, and seven zone-level commercial centres. Meanwhile, 28 community-level commercial centres will be planned taking into consideration the distribution of residential land in the city’s master plan.
2. Nantong’s Consumer Market
2.1 Growth in Retail Sales
In the past few years, Nantong has maintained a double-digit growth rate in its total retail sales of consumer goods, which amounted to Rmb215.4 billion in 2014, representing a year-on-year increase of 11.8%. The city has become the fourth largest consumer market in Jiangsu province, taking up about 9.3% of the provincial total. In the total retail sales of enterprises above a designated scale in 2014, growth by sector was as follows: cars (8.1%), home appliances and audio-visual products (5.6%), petrol and products thereof (19.8%), and cosmetics (4.6%).
A comparison of Nantong’s urban household ownership of consumer goods between 2007 and 2013 shows that there has been a rise in most product categories. This is particularly so for products affordable and favoured by the middle class such as cars, computers, air-conditioners and mobile phones.
2.2 Per Capita Disposable Income and Consumption Expenditure
In 2014, the per capita disposable income and consumption expenditure of Nantong’s urban households stood at Rmb33,374 and Rmb22,035 respectively. Between 2009 and 2014, per capita disposable income grew at an average annual rate of 11.4% while per capita consumption expenditure rose at an average annual rate of 13.1%.
3. Characteristics of Nantong’s Consumer Market
3.1 Population Structure
In 2014, Nantong had a permanent population of 7.298 million, accounting for 9.2% of Jiangsu’s provincial total.
According to China’s sixth population census, among Nantong’s permanent population in 2010, 47.3% were males, with 10.6% aged 0-14, 72.9% aged 15-64, and 16.5% aged 65 or over.
The education level of the permanent population in Nantong has risen notably. Among the city’s population, 7.7% have reached university level, 14.9% have received senior high school education, 38.9% have received junior high school education, and 30.6% have received primary school education. Compared with the findings of the fifth census conducted 10 years earlier, the number of people with university education has risen from 2,667 to 7,666 per 100,000 people in the city. There are 2.59 million households in Nantong. Each household has 2.65 persons on average, which is 0.22 persons fewer than 10 years earlier.
3.2 Characteristics of Consumers
Analysis shows that people in Nantong spend two-thirds of their disposable income on consumption. The post-70s to post-90s generation in the city go after higher quality of life. Their consumption philosophy can be characterised as: ‘saving money is unwise, it is only when you are willing to spend that you are prompted to make more money’. As regards how Nantong people spend their money, according to an analysis made by the National Bureau of Statistics Nantong investigation team, local people spend almost 30% of their money on food. However, it is interesting to note that the share of personal consumption expenditure on food is gradually declining. Where spending on eating out is concerned, the business of mass catering, which offers convenience and value-for-money, is brisk. Meanwhile, star-grade hotels are also launching special offers in a bid to seize a share of the market.
Accommodation also takes up a considerable share of Nantong people’s consumption expenditure. Here, accommodation does not refer to home purchase, but rather, spending on products and services related to housing, including water, electricity and gas charges, property management fees etc. Moreover, transportation and communication account for over one-tenth of local people’s expenditure, while education, entertainment, medical and health care also account for about one-tenth.
The impetus made by the holiday economy in consumer spending is apparent. On such festivals and holidays as the National Day, Labour Day (1 May), and New Year’s Day, retailers including Wenfeng Great World, Golden Eagle, Global Era and Nantong Yaohan make great efforts in organising themed promotional activities,such as shopping festivals, exhibition sales, special sale promotions, and carnivals. Leading supermarkets also take part in festival marketing by employing such promotional tactics as putting up posters and offering discounts. The National Day golden week in 2014 is a good example. According to statistics compiled by the Nantong Commerce Bureau, total sales by key retail enterprises monitored in the city, including 78 department stores, supermarkets, home appliances marts and auto 4S shops, topped Rmb676 million, up 11% year-on-year. Sales of gold and jewellery items exceeded Rmb50 million, a year-on-year increase of over 20%.
Nantong people are also keen online shoppers. According to the figures released by Alipay in 2014, the per capita online payment made by Nantong people during the year was Rmb18,792, ranking 35th in China, while Jiangsu ranked sixth. Of this Rmb18,792, expenditure on shopping was Rmb6,746. By comparison, the per capita online payment made by Nantong people 10 years earlier was only Rmb800. In other words, the per capita online spending by Nantong people in 2014 was 23.5 times that of 2004.
The overwhelming promotional efforts made by e-commerce operators have unleashed the purchasing power of Nantong people. During the shopping spree on Singles’ Day (11 November) in 2014, Nantong people spent a total of over Rmb360 million at Taobao.com and Tmall.com on that day alone. This figure was higher than the total sales of 19 key commercial enterprises under monitoring in the three days during the National Day golden week.
Compared with cities like Nanjing and Suzhou, the consumption concept of the people in Nantong is relatively conservative. However, following the entry of flagship stores from a number of international luxury brands, such as Louis Vuitton, Prada, Gucci and Burberry, luxury goods have gradually established a presence in the Nantong market.
3.3 Modes of Business Operation
With the opening of several commercial complexes in Nantong in the last two years, the commercial layout of the city has undergone qualitative changes. Golden Eagle Shopping Center, Harmony City, Wenfeng City Square and ZNC Shopping Mall have clearly defined the core commercial district on Gongnong Road. Furthermore, following the entry of Mixc and Wanda Plaza in Gangzha District, as well as Nantong In City and Orstar City on Gongnong Road, Nantong has already entered the HOPSCA (hotels, offices, parks, shopping, convention centres and apartments) era.
Commercial complexes, which house catering, entertainment and shopping facilities under one roof, play an important role in stimulating the consumption of the local people. On the opening day of Harmony City on 20 December 2014, customer flow broke the 300,000 mark. The grand opening is comparable to that in large cities like Suzhou. Customer flow at this commercial complex hovered in the 100,000 region even after Christmas Eve.
The findings of the 2014 Nantong Commercial Property and Consumer Survey shed some light on the consumer habits in Nantong. While the halo of the city proper as a commercial centre is dimming, competition from the New City District, Gangzha District, and Economic and Technological Development Zone is fierce. In this survey, nearly 60% of the respondents opted for ‘shopping in nearby areas’, with comprehensive shopping malls/supermarkets being the most popular. Offering shopping at one’s doorstep is the development direction of commercial property in Nantong.
As Nantong people’s spending level rises, consumer habits are changing, bringing about changes in product type, proportion of live and fresh foods, distribution of supermarkets, and differential services. As such, traditional hypermarkets are increasingly losing their attraction. Meanwhile, competition in the department store and retail sector is becoming more and more intense. International brands, such as Metro, RT-Mart and Lotte Mart have moved in one after another, bringing with them more advanced service concepts, higher food safety standards, and a richer array of foreign goods.
According to incomplete statistics, RT-Mart, Metro, Auchan and Lotte Mart are the current leading large-scale supermarkets in urban Nantong. Meanwhile, a number of new comers are joining the fray, examples include Auchan at ZNC Shopping Mall, RT-Mart at Vanke City Plaza which opened for business last year, RT-Mart at Shimao Plaza, which is scheduled for opening soon, and Wumart, which plans to establish a presence at Wuzhou International Shopping Mall. Following the rapid rise of a number of commercial complexes in Nantong, it can be expected that large supermarkets, which are the most popular under the new commercial environment, will develop in leaps and bounds.
4. Profiles of Nantong’s Major Commercial Districts
Nanda Street is the busiest commercial centre, as well as the only mature commercial district in Nantong with department stores and street-level shops as the major mode of business operation. Currently, the Nanda Street commercial district is dominated by specialised marts. A great number of development projects are put up for sale or under construction in this commercial district. As for Beida Street, following the construction of North Wing New Town, it is set to become an important regional-level commercial district in Nantong. Meanwhile, the New City CBD commercial district is a new city-level commercial district planned by Nantong, with a number of large-scale commercial projects in the neighbourhood brought to completion soon.
Nanda Street is one of the three city-level commercial districts in Nantong. It is also the most influential commercial district in the city with the largest visitor flow, strongest purchasing power, and the most comprehensive modes of business operation. Nanda Street commercial district had, fro a long time, been the single dominant commercial centre of Nantong. However, with the rise of Zhongnan commercial district and Beida Street commercial district in recent years, the halo of Nanda Street commercial district has somewhat dimmed.
The Nanda Street underground pedestrian shopping street opened for business in late December 2012. This underground shopping street, featuring a construction structure of two and a half underground levels, offers nearly 30,000 sqm of shopping area housing 300 brands. It has also added almost 30,000 sqm of scarce parking space to Nanda Street. The completion of this underground shopping street has ushered in an era of 3D development in the commercial district. In the last two years, leading shopping malls in Nanda Street have also undergone several rounds of transformation. Wenfeng Great World, the leader in Nanda Street commercial district, has evolved from a pure department store into a department store-type shopping centre.
Wuzhou International Shopping Mall, situated at the junction of the extended section of Nanda Street and the prime section of Zhongxiu Middle Road, opened for business in 2014. As the key hub of Nanda Street and Beida Street, this shopping mall signifies the optimisation of Nantong’s Old City District commercial district. Where market positioning is concerned, Wuzhou International Shopping Mall houses shopping, leisure, catering, entertainment, premium goods SOHO, star-grade hotel, offices, and boutique residential facilities under one roof. It also gives emphasis to facilities for children in order to stimulate family spending. Inside the mall is a 2,500-sqm electronic game city run by a Taiwanese company. This establishment is not only a top-level electronic game city in Southeast Asia, but also unique in the entire east China region. Moreover, Tianmicun (literally “sweet village”), the largest indoor experiential park for children in Nantong has also set up a presence here, with various facilities including a rock climbing zone and an amusement zone.
City North New Town (Beida Street)
Nantong’s North Wing New Town core zone is closely linked with the city proper. Following the construction of the Beicheng Bridge and Jinghai Bridge, the North Wing New Town core zone commercial district has entered the 15-minute economic circle of the city proper, which is greatly beneficial to the formation of the Beida Street commercial district. The essential urban function of Beida Street in offering catering, residential, travel, tourism, shopping and entertainment facilities is gradually improving.
At present, the commercial layout of this core zone commercial district is taking shape. Commercial projects such as China Resources’ Mixc Shopping Mall, Vanke City Plaza and Hongming Mo’er Square cluster here along Beida Street. Among these, Mixc Shopping Mall is currently the largest and most upmarket commercial complex in Nantong. It is home to a multitude of flagship stores of such international luxury brands as Louis Vuitton, Prada, Gucci and Burberry. Three pillar facilities, namely a real ice skating rink, an iMax cinema, and Ole high-end premium supermarket, are also scheduled for completion in 2016. Vanke City Plaza, which opened for business in 2014, embodies shopping, entertainment and Grade A office facilities. Currently, tenants including RT-Mart have moved in.
The leisure and entertainment facilities in the Beida Street commercial district are gradually improving. Nantong Adventure Land, the first dynamic project housing cultural and entertainment facilities under one roof, has been opened. Meanwhile, Holiday Inn Nantong Oasis International, Jianghai Fengqing Jie and Hongming Mo’er Square here offer all kinds of gourmet food and beverages.
New City District
The core of the New City District is Nantong’s Central Business District. Positioned as a commercial district ‘integrating with south Jiangsu and merging into Shanghai’, the CBD embraces multiple functions, such as business centre, administration and commercial centre, financial centre, sports centre, convention and exhibition centre, hotel industry centre and fitness industry hub.
ZNC Shopping Mall, which opened for business in 2011, is the first successful pathfinder in the CBD commercial zone by bringing in over 20 international brands which made their entry into Nantong for the first time, offering a brand new experience of one-stop shopping and entertainment to the local people. Located to the east of ZNC Shopping Mall, Zhongnan Department Store, which opened for business in September 2014, is the first luxury goods department store in Nantong offering a wide range of international first-line brands. Unlike ZNC Shopping Mall, which includes catering, entertainment and shopping facilities, the positioning of Zhongnan Department Store is one that offers a moderate luxury lifestyle. Of the well-known domestic and foreign brands it has introduced, 50% made their first appearance in Nantong.
Zhongnan New World Center, located to the north of ZNC Shopping Mall, commenced construction in 2014. This shopping centre will bring together the most upmarket leisure and entertainment facilities in Nantong, including restaurants, spas and bars. The project will create a landmark commercial and leisure centre.
The New City District commercial area is still taking shape, step by step. Currently, large-scale HOPSCA and shopping malls, such as Orstar City, Nantong In City, Wenfeng City Square and Harmony City are opening for business here. According to the CBD development plan, in the future an enormous underground commercial zone covering an area of over 100,000 sqm will be built here. By that time, the ZNC Shopping Mall, Zhongnan Department Store, Zhongnan New World Center and Central Park will link up their businesses underground to complement the above-ground commercial district. According to preliminary estimates, by the end of 2015, the CBD commercial district will have a business area exceeding 400,000 sqm, including large-scale shopping malls, riverside themed commercial streets, sports, entertainment and leisure squares, forming a truly new commercial centre.
Wushui, Gangzha District
The Wushui commercial district in Gangzha District is conveniently located at the intersection of Gangzha District and Chongchuan District, about 5 km from Nantong’s existing traditional commercial zone. The planned area of Wushui commercial district is 4 sq km and its major modes of business operation are shopping centres, department stores, hotels and catering facilities. Currently, the entry of Wanda, SEG, Auchan and Decathlon into this commercial district is attracting more and more visitors. With the imminent entry of several domestic and foreign brands, including IKEA, Suning and 1912 Group of Nanjing, Wushui commercial district is bound to develop further.
In January 2015, the 1912 Group signed an agreement with Gangzha District of Nantong City establishing a presence in the core area of Wushui commercial district. The 1912 project will comprise a cultural, commercial and residential area encompassing bars, restaurants, entertainment facilities, shops and residential blocks. The entry of 1912 is expected to expand the scale and enhance the quality of Nantong’s nightlife, making spending on urban late night activities a normal consumption mode in the city. Nantong Wanda Plaza in Wushui commercial district, which is scheduled to open for business by the end of 2015, will promise to be an upmarket commercial hub in the city.
Xinghu, Economic and Technological Development Zone
The Nantong Economic and Technological Development Zone is home to a great number of enterprises. To date, there are over 600 foreign-invested enterprises and more than 2,000 Chinese funded enterprises in the zone. With a permanent population of about 150,000 living in and around the Xinghu area alone but only one shopping mall, Xinghu Plaza 101, in the Zone, the shortage of large-scale commercial facilities can hardly satisfy the consumer demand of enterprises and residents in the zone.
The Xinghu commercial district was formed in 2011, comprising the Xinghu Street area and Xinghu Plaza 101. The Xinghu Street area is positioned as a catering, leisure, entertainment and consumption centre. With the entry of Shimao Plaza in the Zone in 2014, today well-known brands which have established a foothold here include: RT-Mart, Shimao City Cineplex, Starbucks, Zara, Nike, Shenhuxi KTV, and Ganghao International Fitness Club.