8 Oct 2015
Shaoxing: Profile of a Consumer Market
1. Economic Overview and Development Planning
In 2014, Shaoxing’s GDP reached Rmb426.6 billion, an increase of 7.5% over the previous year. In terms of economy size, the city ranked fourth among all cities in Zhejiang. Calculated on the basis of its permanent population, its per capita GDP stood at Rmb86,135.
Industrial value-added accounts for 50% of Shaoxing’s GDP. Modernised textiles, machinery and electronics, pharmaceuticals and chemicals, and food and beverages are the four main traditional industries. Their total output amounted to Rmb569.1 billion in 2014. In recent years, the GDP share of the textile industry has dropped while that of the machinery and electronics sector increased. An industrial development pattern has formed with modernised textiles as the cornerstone and machinery and electronics as well as pharmaceuticals and chemicals as key pillars. There are also niche sectors, such as food and beverages, as well as strategic emerging industries, such as energy conservation and environmental protection, which are developing at an accelerated pace. Shaoxing’s Keqiao Town is a major textiles market.
Shaoxing’s tourist industry has been developing fast in recent years. In 2014, the city received 63.25 million tourists, tourism receipts amounting to Rmb65.2 billion, representing year-on-year increases of 11.4% and 11.6% respectively. Of these, 62.55 million were domestic tourists, accounting for Rmb63.7 billion in tourism receipts.
Shaoxing had 18,592 newly established private enterprises in 2013, representing a year-on-year increase of 104.9%. Of the top 500 Chinese private enterprises in 2014, 22 were from Shaoxing, putting the city in second place in Zhejiang for 11 consecutive years, trailing only Hangzhou.
Commodity markets are thriving in Shaoxing. As of the end of 2014, the 411 commodity markets in the city posted a combined turnover of Rmb290.5 billion, up 12.8% year-on-year. In particular, the turnover of consumer goods markets increased by 17.4% to Rmb175.9 billion, while the production materials markets grew by 6.5% to Rmb114.5 billion. Among these markets, 27 registered turnovers exceeded Rmb1 billion and nine registered turnovers in excess of Rmb10 billion. The turnover of China Textile City rose 16.0% to Rmb74.2 billion while Qianqing light textile raw materials trading grew by 6.5% to Rmb49.6 billion.
According to the Urban Master Planning of Shaoxing City (2011-2020), the city aims to increase its GDP to Rmb560 billion and per-capita GDP to Rmb120,000 by 2020, with the primary, secondary and tertiary sectors having a share of 3%, 47% and 50% respectively. Shaoxing will exert great efforts to develop strategic emerging industries and accelerate the establishment of an industrial system with low carbon emissions. It will have ‘one agglomeration’ and ‘two city groups’ as the core of urban development. The former refers to the urban agglomeration in northern Shaoxing including Yuecheng District, Shaoxing County and Shangyu City, while the latter refers to the Zhuji city group, with Zhuji city and the new Shengzhou and Xinchang city group at the centre. Also, according to the Plan of Shaoxing for Building A Smart City, Shaoxing will focus on ‘urban integration’ in promoting projects relating to the building of a smart city, including the three major projects of an urban public information platform, smart health system and smart transportation.
2. Shaoxing’s Consumer Market
2.1 Growth in Retail Sales
In 2014, Shaoxing’s retail sales of consumer goods rose 12.8% year-on-year to Rmb148.7 billion. Based on the retail sales of goods by enterprises above a designated scale, sales of food, beverages, tobacco and wine grew 2.8%, while car sales increased by 11.1%. Precious jewellery saw the fastest growth, with an increase of 40.1%.
2.2 Per Capita Disposable Income and Consumption Expenditure
In 2014, per capita urban household disposable income in Shaoxing was Rmb43,167, while per capita consumption expenditure was Rmb26,231.
3. Characteristics of Shaoxing’s Consumer Market
3.1 Population Structure
Shaoxing had a permanent population of 4.96 million at the end of 2014. According to China’s sixth population census, in 2010, 21% of Shaoxing’s permanent population were non-natives from other parts of the country. 50% were male, 12.8% were aged 0-14, 71.8% were aged 15-59, and 15.4% were aged 60 or above.
Of the permanent population, 7% had a university education, 13.7% had senior high school education, 41% had junior high school education and 29.6% had primary school education. Compared with figures from the fifth census 10 years earlier, the number of people with a university education rose from 2,262 per 100,000 people to 6,997.
Shaoxing had 1.74 million households, with an average of 2.58 persons in each, a decrease of 0.3 persons from 10 years earlier.
3.2 Characteristics of Consumers
Of the 11 prefecture-level cities in Zhejiang, Shaoxing is known for its rich cultural background. The personality of Shaoxing people is likened to the Shaoxing yellow wine: mild, flexible, humble and unassuming. This mirrors their consumption habits, which are relatively conservative and low-key. It takes some time for Shaoxing residents to accept novel things. ”Many a Shaoxing native who is used to eating preserved vegetables is not willing to try out sashimi” is the way many people describe their consumption habits. People of Shaoxing are rich, but there is a lack of consumption leaders. Generally speaking, they are long on thriftiness and short on enjoyment.
Shaoxing’s main consumer groups include owners of private enterprises, the second generation rich, government employees, teachers and white-collar workers. With generally refined personal qualities, higher-than-average incomes and pursuing a certain standard of living, these groups are therefore partial to brands. Shaoxing is unique in terms of geographical location. By car it is only one hour from Hangzhou and three hours from Shanghai. Take Hangzhou Tower, the most sophisticated department store in Hangzhou, for example: the large number of cars with Shaoxing licence plates in its basement car park indicates that there is an upmarket consumer group in Shaoxing. On the other hand, the consumer attitude of many people in the city has been influenced by the media and the business community over the years. They have come to realise that they must not just know how to make money but must also know how to spend money. Today, they are more willing to pay for better quality and greater convenience.
While trendy goods, such as computers, mobile telephones and cameras, have become mainstream popular items, the consumption of air conditioners, colour TVs, refrigerators and other home appliances is trending towards medium- to high-end brands, while functionality moves towards emphasising health, environmental protection and energy conservation. The sales of clothing and accessories, precious jewellery, high-end watches and cosmetics are up substantially. Sales of brand name cigarettes, brand name wines, nutrition supplements and gifts have also been rising gradually, mainly attributable to the continuous improvements in Shaoxing’s commercial environment. The people of Shaoxing also show great interest in leisure and recreation. Places like Luxun Cinema and Qiaobo Ice and Snow World are popular.
Continuous improvements in Shaoxing’s commercial environment in recent years have resulted in the appearance of many brands and medium to high-end commercial enterprises, so there are more places where Shaoxing people are willing to spend money – people in Shaoxing are very brand conscious in their consumption. Previously they liked to spend money in Hangzhou and Shanghai, but now that Shaoxing has more numerous and more sophisticated places for them to spend, a lot of outgoing consumption is channelled back to the city.
Shaoxing's middle and low-end consumer groups cover ordinary local citizens (salaried workers) and migrant workers. With limited income, they do not have special brand preference and are very price sensitive. They usually shop at local department stores or specialised markets and shop around to compare prices, reflecting their conservative shopping attitude.
In Shaoxing, Jiefang Road is the busiest shopping district, where department stores with the heaviest shopper traffic are located, such as Guoshang Mansion and Runhe Shopping Centre (潤和購物中心). The promotional strategies employed by Shaoxing’s department stores are not unlike those used in other cities. Whenever there are festivals and long holidays, they will roll out promotional activities, such as offering gifts or discounts for purchases over a certain amount, or offering bonus points for later redemption. In particular, during the golden weeks of the Spring Festival and the National Day period, promotional ploys are used to the fullest extent and the budgets involved are considerable. Even for Shaoxing residents who are known for their rational and cautious consumption, the temptation is so great that they cannot help but flock to the department stores to do their shopping.
4. Profiles of Shaoxing’s Major Commercial Districts
This commercial district is made up of several main commercial streets, including the north-south running Jiefang Road and Zhongxing Road, and the east-west running Luxun Road, Renmin Road and Shengli Road. With a total business floor area of some 200,000 sqm, it is the most bustling central business district in Shaoxing. Functionally, it has a full complement of industries and functions, a place for shopping, dining, sight-seeing, leisure, entertainment and business. Commercially, it has a high concentration of shops, offering the most dynamic marketplace and most thriving commercial sector, and commands extensive reach. Shaoxing’s top department stores, including Guoshang Mansion, Runhe Shopping Centre, Hualian Commercial Building and Gongxiao Building (供銷大廈) are all located here.
This commercial district positions itself in the medium- to high-end market and its basic consumer groups are local residents and tourists of a considerable income. Jiefang Road commercial district is currently the busiest, as well as the longest-established in Shaoxing. Nevertheless, problems such as inconvenient traffic caused by insufficient parking space are increasingly forcing it to compete with emerging commercial districts in the form of modern shopping malls such as Dear Town.
In recent years, all major department stores have changed their business thinking, seeking ways to transform and upgrade. Shopping centres already opened or soon to open on Jiefang Road include Huijin Plaza, Yuedu Mall, Guoshang Mansion, Gongxiao Building, Runhe Plaza, Spring Department Store, Jinshidai Plaza (金時代廣場) and H-Max City. The opening of Shaoxing Intime City on Jiefang South Road at the end of 2014 changed the commercial landscape of the old city area. Its 123,000 sqm shopping centre houses international brands like H&M, Bravo supermarket, Lumiere & Imax Cinemas and Molly Fantasy. Nearly half of its 360 domestic and foreign brands are venturing into Shaoxing for the first time. Intime City's 1,800 parking spaces also help alleviate the parking problem in downtown Shaoxing.
Dear Town (Didang New Town)
Located in the northeast corner of Shaoxing’s old town district, Dear Town is bounded by Yuezhou Bridge and the East Ring Line in the east, Renmin East Road in the south, the national highway in the north and Huancheng East Road in the west. As an extension of the Jiefang Road neighbourhood, this commercial district is designed according to new business and commercial models, where large modernised shopping centres are merged with themed commercial service blocks. Dear Town boasts a total construction area of 1.3 million sqm, of which, 800,000 sqm is upmarket residential housing and 200,000 sqm is shopping malls and pedestrian streets. With commercial and high-end residential projects, Shimao Skyline Center (the tallest building in northern Zhejiang) and hotels in the neighbourhood, this is a place for business offices, shopping, leisure, tourism, cultural and entertainment activities.
With an area of 180,000 sqm located at the centre of Shaoxing new city, Shimao Plaza commands a strategic position at the junction of Shaoxing’s old and new towns. Shimao Plaza is the most upmarket one-stop shopping centre, with a full complement of business formats including outlets for shopping, leisure, sight-seeing, art, dining, entertainment and business services. Parkson Department Store alone carries more than 300 famous domestic and foreign brands. In addition, there are trendy brands, such as Auchan Supermarket, Shimao City Cinema, Puledi KTV, Cartier, Davidoff, DuPont, Versace and Starbucks, among others.
Keqiao of Shaoxing has, for many years, been honoured with the name ‘Golden Keqiao’. Now its name is known at home and abroad because of the presence of the China Textile City, currently the largest piece goods hub in Asia with thousands of buyers visiting daily to carry out their business.
Keqiao Wanda Plaza is the largest commercial real estate project in the Keqiao area. Located at the junction of Jinkeqiao Avenue and Qianqing-Taoyan Highway, it comprises different types of properties, including high-end residential, shopping malls and street-level shops, as well as 3,000 parking spaces. Wanda Plaza has six anchor shops, namely Van’s Department Store, China Resources Vanguard Supermarket, Gome Electrical Appliances, Wanda International Cinemas, Super Player amusement park and Dagexing KTV. In addition, a 1,350 metre long indoor pedestrian street, the longest in Shaoxing, has been built.
The positioning of Wanda Plaza is the medium to high-end market and its target consumer groups include local private enterprise owners, government employees, business people from out-of-town and overseas buyers.