17 July 2015
Shenyang: Profile of a Consumer Market
1. Economic Overview and Development Planning
Shenyang is the capital of Liaoning province and the industrial, transportation and commercial hub of northeastern China. It is the city drawing the second most foreign capital in the province, with well-developed heavy industry. Its service sector has also been actively developed in recent years. In 2014, its GDP grew 6.0% year-on-year to Rmb709.9 billion, of which, secondary industry accounted for 49.9% and tertiary industry 45.5%. Reckoned in terms of permanent population, Shenyang’s per-capita GDP in 2014 was Rmb85,816 and the growth rate was 5.6%.
As a transportation hub, Shenyang commands strong influence in the northeast. In addition to drawing nearby population (from Jilin, Heilongjiang and Inner Mongolia, for instance) to spend there, it is also a regional distribution centre handling the wholesale of many consumer goods, like clothing and daily articles. As a regional consumption and distribution centre, Shenyang’s shopping malls and department stores are superior to those in its neighbouring cities in terms of both class and number. This is why it can attract consumers from neighbouring cities to come shopping by car after office hours or at weekends, aggregating all the high-consumption groups from within the province, including private business owners, foreigners, senior executives and government officials.
In actively diversifying its economy in recent years, Shenyang is striving to advance its industries in high technology, services, as well as finance and insurance, thereby driving the development of the business and tourism sectors for the whole northeast region. Thanks to its progress in developing high-tech industries, Shenyang has been ranked one of China’s top cities in innovation capability. It is also striving to promote the tourism industry by developing hot springs, wetlands, rural villages, and river banks as well as tourism with special features, including the hosting of Shenyang International Tourism Festival, Shenyang International Ice and Snow Festival, and Shenyang Urban Wetland Tourism Festival. In 2014, the city grossed Rmb106.6 billion in tourism receipts, which represented a growth of 14.3% over the previous year, receiving a total of 83.06 million domestic and foreign visitors, an increase of 10.7%. The figures show that Shenyang is not simply a key industrial base.
Shenyang is actively improving its urban development by strengthening its infrastructure. Major projects include the construction of Metro Lines 9 and 10, and the rapid development of real estate along the Metro lines. In line with other transport infrastructure projects underway, a number of expressways are being built, including the Second Ring Road elevated bridge phase two, the Yingbin Road elevated bridge and the Dongling Road elevated bridge. Along the transportation network, new commercial and residential projects have started or completed successively. As a result, the central urban districts of the city are being expanded outwards. At the same time, infrastructure development of new cities and towns is accelerated and urban layout is optimised to promote new urbanisation.
On economic planning, the “one city, four belts” layout is taking shape in Shenyang. In the city centre, a headquarters base for finance, commerce, technology and information industries will be established along the so-called "golden corridor, silver belt". Four major economic zones and industrial clusters will be developed around the city centre. In the east, the Shenyang Automobile City in Dadong district forms the core in the development of automotive trade. In the south, the Shenyang International Exhibition Center will support commercial exhibition, trade logistics, technology, information and other modern services. The west, revolving around the equipment manufacturing industry cluster in Tiexi, is mainly dedicated the development of equipment manufacturing and supporting industries. In the north, the northeast headquarters base projects give support to the fostering of modern services sector, strategic emerging industries and the agro-processing industry.
2. Shenyang’s Consumer Market
2.1 Growth in retail sales
As the largest consumer market in the northeast, Shenyang posted a 12.1% year-on-year increase in retail sales of consumer goods to Rmb357 billion in 2014. In the total retail sales of enterprises above a designated scale in 2014, there was a growth of 13.8% in Chinese and Western medicines, 11.7% in food and beverage, tobacco and alcohol, 23.5% in household appliances and audiovisual equipment, 10.8% in daily necessities, and 24.8% in communications equipment.
A comparison of 2002 and 2013 figures reveals that there are obvious rising trends in the ownership of consumer durables by Shenyang urban households, particularly high-tech consumer electronics, including home computers, mobile phones and products which are affordable to the middle class in general, such as cars.
2.2 Per capita disposable income and consumption expenditure
In 2014, the per capita disposable income of Shenyang’s urban households was Rmb31,720 and their per capita consumer expenditure was Rmb24,223, representing increases of 9.1% and 8.5% respectively. According to the 2013 figures of high-income households, the per capita disposable income was Rmb60,337 and the per capita consumption expenditure was Rmb41,209.
3. Characteristics of Shenyang’s Consumer Market
3.1 Population structure
Shenyang had a permanent population of 8.26 million in 2013, up 11% from 2005 and accounting for about 19% of Liaoning’s population.
According to China’s sixth population census, 50.5% were males while 49.5% were females among its population in 2010. In terms of age, 9.8% were between 0 and 14 years old, 74.9% between 15 and 59, and the remainder were 60 or above. 20.4% of the population had an education standard at or above university or post-secondary level, 59.3% at secondary level and the remainder were at primary level or below.
There were 2.84 million households in Shenyang, with an average size of 2.65 persons. The average household size had decreased by 0.39 person from 3.04 persons 10 years earlier.
3.2 Characteristics of consumers
Shenyang is the largest city and also the economic and commercial hub of the northeast. It is situated inland and factors such as geographic location, climate and external exchanges are reflected clearly on its consumers.
While Shenyang has distinctive differences in the four seasons and rather long duration for its winters and summers, its consumers also exhibit distinctive seasonal characteristics in their shopping. There is seasonal variation in merchandise from clothing to electrical appliances and household articles, so there are peak shopping times for all seasons. One month, or perhaps even earlier before the approach of a season, all merchandise bought by consumers would be those required in the coming season. If in-season merchandise is bought, it is merely for getting higher discounts and the merchandise will be kept for use in the same season next year.
Spending power of people from outside the city not to be overlooked
With a population of 8.26 million, Shenyang by itself is already a huge consumer market. The city’s spending power is further augmented by people from outside the city, which include ordinary transient population and those from neighbouring cities who visit Shenyang to do their shopping; the spending power of the latter is stronger and they usually buy mid- to high-grade merchandise. Shenyang’s total retail sales of consumer goods in 2014 ranked first among the four sub-provincial level cities in the northeast, including Harbin, Changchun and Dalian. Shenyang’s shopping malls are of top quality among the neighbouring regions, attracting many shoppers from outside to buy upmarket clothing, home appliances, household articles, gold and silver jewellery, cosmetics and cars, apart from daily necessities.
Demand for luxury goods among the top in the country
At present, the consumption of luxury goods in Shenyang is already among the top on the national league. As one of the metropolitan economic centres, Shenyang is the host of an annual luxury goods exhibition, regarded as an occasion for new product launches, and an indicator of consumption trends by industry players. Luxury brands entering Liaoning province mainly set foot in the three major cities of Shenyang, Dalian and Anshan. Luxury goods of first-class international brands found in Shenyang include luxury sports cars, private yachts, private jets, premium wines and spirits, top-notch jewellery and watches, fashion, art masterpieces from around the world, and high-end furniture.
Bias towards products made outside the city
Bias towards products made outside the city is a common characteristic of Shenyang consumers. Shenyang used to be a heavy-industry city and its light industry was not well developed. Hence, there is a lack of well-known light industrial products manufactured locally and most of the common consumer goods are produced outside the city. This explains why preference for “foreign” goods is so pervasive. The preference of Shenyang consumers is not limited to merchandise from foreign countries, but also those coming from Hong Kong, Taiwan and even from Guangdong and Shanghai. From clothing, furniture, accessories, headwear and footwear to electrical appliances and general merchandise, as long as an item comes from outside the city, it will sell well. For the same merchandise, if prices are more or less the same, Shenyang consumers usually choose the one produced outside the city.
Marked differences in consumption habits of different groups
Consumers in different employment would also have different shopping standards and different spending power. To date, industry remains the largest sector in Shenyang and so there are a large number of industrial workers. There are differences between these industrial workers and senior executives in their consumption concepts and salary incomes. For retired workers in particular, they have basically no consumption other than spending on daily necessities.
The fact that females and children are high-consumption groups is an invariable rule. In Shenyang, high consumption by children seems particularly prevalent. Wearing famous brand clothing is their norm, from infants and primary school kids to secondary school students, few would refrain from wearing or using articles of famous brands. As a result, all merchants operating here would target them as the major consumer groups.
Shopping ambience an increasingly important consideration
In Shenyang, a good shopping ambience not only means being spacious, well-lit, pleasant, comfortable and convenient, but also means “warm in winter and cool in summer”. Local consumers are increasingly concerned that they should also enjoy the experience of shopping and, for this, merchants are upgrading more and more the decoration and layout of their shops, whether it is a large department store or a small specialty store. For some upmarket shopping venues, their shopping ambience can even be described as luxurious. Even regular stores on the street would have no choice but to pay attention to ambience in recent years, or else they would not be able to attract any customers.
In addition, unless it is for some common articles for daily use, Shenyang consumers would rather walk a longer distance and spend a little more time to go to a commercial district to do the shopping. This is because there would be more choice and they may get some pleasant surprises, as well as a chance to experience the joy of shopping. Besides, some shopping malls with more comfortable, more life-oriented and more fashionable ambience have emerged in recent years, and they are gradually becoming the favourite shopping venues of chic and trendy consumers.
Practical and rational spending concepts
In shopping, other than concerning themselves with their personal experience, Shenyang consumers exhibit a lot more rationality. It is in their nature that Shenyang people are more practical than romantic and more rational than emotional. Though some consumer groups may often be impulsive in their shopping, Shenyang consumers would soon get indifferent to merchants’ dazzling promotional activities and would give more weight to whatever practical benefit they may get. So merchants who are varying their tricks in different ways may not succeed in arousing consumers’ interest. In recent years, Shenyang people have been attaching greater importance to the price-performance ratio in consumption and, for instance, more and more people turn to group buying. They are also paying more attention to quality of life, so high-class leisure premises, elegant self-service restaurants, and trendy metropolitan shopping centres can always arouse Shenyang residents’ interest to buy.
4. Profiles of Shenyang’s Major Commercial Districts
Shenyang's main commercial districts include Zhongjie, Taiyuan Street, Beixing, Xita (meaning West Tower), Wu’ai, Nanta, Beizhan The Mixc and Forum 66. Among these, Taiyuan Street and Zhongjie are the two core commercial districts.
Located in Shenhe District and acclaimed as the No. 1 commercial street in China’s northeast, Zhongjie is the longest-established commercial street in Shenyang. It has a history of over 300 years and is the first pedestrian shopping street in China. In 2005, it was named one of the “Top 10 Famous Commercial Streets of China”. As of early 2015, Zhongjie commercial street district comprises Zhongjie Road and Xiaodong Road, which is the longest commercial pedestrian street with a total length of 1,500 metres. For future plans, the section from Xishuncheng Street to Zhengyang Street will be developed as pedestrian areas, which will increase the total length of Zhongjie to 1,900 metres and further improve the commercial scale.
There are more than 300 business operators in Zhongjie commercial district, covering various retail goods and services; the major ones include clothing, jewellery, luxury watches, accessories, dining, general merchandise and specialised commodities. This commercial district serves the whole of Shenyang city, with a daily visitor flow of about 300,000, among which some 80% are local consumers and some 20% are out-of-towners. Zhongjie takes the young, trendy upper-middle class as its primary target. There are commercial buildings of moderate size, including Commercial City, Xinglong Happy Family Mall, New-Mart, Jiu Guang Department Store, New World Department Store and Palace 66, together with a full range of famous domestic and international brands, such as UGG, Max & Co and Zara. Also found here are century-old stores including Hangdeli and Cuihua Gold Shop. Zhongjie is in the neighbourhood of Shenyang Imperial Palace Museum, an attraction for luring visitors to come and shop.
Next to Shenyang Railway Station, Taiyuan Street is one of the most famous commercial streets in Shenyang. With a length of almost 1,000 metres it is a chic commercial street targeting consumers of medium to high income levels. For many years, Zhongxing-Shenyang Commercial Building has not had a rival on this street, until the entry of Isetan of Japan in recent years. Other large commercial buildings here include the Hualian Commercial Building and Wuzhou Chuntian. Today, Taiyuan Street commercial district also comprises Zhonghua Road, which intersects with Taiyuan Street. Of late, affected by renovation work on the south section of Taiyuan Street, which has lasted for several years, more and more merchants and shoppers are turning to Zhonghua Road. For example, Wanda Department Store, New World Department Store, Gome Electrical Appliances, Wal-Mart, Parkson and Hong Kong’s New World have even set up three department stores within a distance of several hundred metres on Zhonghua Road, forming a New World golden triangle layout.
Located inside Huanggu District and centred around Changjiang North Street, Beixing has a history of more than 300 years and is one of the oldest commercial streets in Shenyang. Beixing enjoys an enviable geographic location and representative commercial set-ups here include Kingson Department Store and Beijing Hualian. There are also a host of different small stores along Changjiang Street catering to everyday consumption needs. Wholesaling of agricultural products at Beixing Farm Produce Market is also a special feature of the street.
Generally speaking, in this district the traffic is congested, the buildings are old, the merchandise is not very high-grade and there is a lack of large upmarket commercial buildings. Since the end of 2008, a 1,300 metre-long underground commercial street called “Shenyang No. 1 Underground Avenue” is being built beneath Changjiang Street.
Xita (West Tower)
Situated in Heping District, this is a street rich in Korean culture. Along the street, one can find a lot of buildings and shops in Korean architecture styles, housing a full array of eateries, entertainment outlets, bathhouses, beauty salons and small supplies stores. Most goods in the shops carry Korean labels and the merchants are either from South Korea or ethnic Koreans from within China.
The Korean Nationality Department Store (朝鮮百貨) and Hancheng Shopping Centre (韓城購物廣場) are two comprehensive department stores on the street. Though their outward appearances suffer in comparison with major commercial buildings on other commercial streets, they have a full range of ethnic merchandise. Their customers include South Koreans staying in Shenyang, local ethnic Koreans and many non-Korean shoppers.
Located in Shenhe District, Wu'ai Market is one of China’s most famous wholesale markets. In 2006, it ranked as one of China’s Top 10 Wholesale Markets. Around the market, Xiaonan Street to the east, Renau Road to the north, as well as Qianchun Lane and Hanlin Road to the south have all become bustling streets full of small commodity shops.
Wu’ai is basically a wholesale market with some retail operations. It attracts a daily flow of 200,000 distributors and retailers from other northeastern cities and regions to purchase various kinds of commodities. These include low, medium and high-end clothing, small commodities, bedroom products, toys, luggage, snacks and small home appliances. Available in the market are not only premium goods from around the world, but also ordinary brand name products. So, all shoppers can get what they want from here, irrespective of whether they are ordinary wage workers or senior executives.
Nanta (South Tower)
South Tower is located in Dongling District and is a commercial area made up mainly of specialised wholesale markets. The larger ones are China Shoes City, Northeast daily articles market and Northeast motorcycles market. For many years, they have collectively formed a major market cluster in the southeast of Shenyang, featuring a strong commercial ambience. Today, there are already a dozen or so specialised markets in this district.
Beizhan (North Station)
This is a commercial district of luxury goods and is fringed by municipal government buildings, Shenyang North Railway Station, Liaoning Grand Theatre and a number of premium hotels and high-class office buildings, such as the Fortune Centre. The major malls here are Charter Shopping Centre and Rich Gate Mall Shopping Mart. Charter Shopping Centre is adopting a “new department store philosophy” offering “new fashion, new culture and new life” and is targeting a mature upper social class with stable incomes as its main consumer group. The Rich Gate Mall Shopping Mart is a complex offering shopping, dining, culture, leisure, entertainment and various services.
Located in the core area of the city’s Golden Corridor square, the Mixc houses more than 200 shops of various kinds in commercial space of nearly 250,000m2. The Mixc features a collection of brand retail, catering and entertainment facilities, such as Megabox Cinema, Ole supermarket, World Ice Arena, and many first-tier international brand shops.
Forum 66 is located in the state-level financial and trade zone in Qingnian Street, to the south of the city government square. It houses world-class shopping centres, grade A office towers, hotels and serviced apartments. Forum 66 has more than 150 shops, of which many are international fashion brands operating for the first time in Northeast China. In addition, Forum 66 has brought together a number of top international brand flagship stores, including Cartier, Giorgio Armani, Ferragamo, Tiffany, Piaget and Rolex.