18 Sept 2015
Zhenjiang: Profile of a Consumer Market
1. Economic Overview and Development Planning
Zhenjiang’s GDP reached Rmb325.2 billion in 2014, representing a growth of 10.9%. Calculated in terms of permanent population, per capita GDP of the city was Rmb102,651. Industry is the major driving force of Zhenjiang’s economy, accounting for about 51% of the city’s GDP.
In recent years, industrial development in Zhenjiang has undergone great changes, with new industries growing in leaps and bounds. During 2014, total sales of the six major industries, namely new materials, high-end equipment manufacturing, new energy, aviation and aerospace, biotech and new medicines, and new-generation information technology, topped Rmb355.7 billion, up 18.5% over the previous year, accounting for 45.1% of the total sales of industries above a designated scale in the city and growing 1.7 percentage points. As a national innovation pilot city and one of the first national intellectual property model cities in China, Zhenjiang was awarded the title of “city of technological advancement” in 2013 for the ninth year consecutively.
The output value of its new and high-tech industries reached Rmb389.7 billion, an increase of 15.8% over the preceding year, accounting for 48.1% of the total output value of industries above a designated scale and ranking first among all cities in the province. In 2014, spending on research and development (R&D) accounted for 2.6% of the city’s GDP, rising a meagre 0.12% over the previous year. With the business revenue of its software industry growing 32.6% over 2013 to top Rmb41 billion in 2014, Zhenjiang is a key city in the international services outsourcing industry belt in southern Jiangsu. The business revenue of the cultural industry amounted to Rmb52.3 billion, with its value-added making up 5.2% of the city’s GDP.
The non-state economic sector in Zhenjiang is developing at a fast and steady pace. In 2014, the total output value of industrial enterprises above a designated scale was Rmb810.2 billion, of which, the output value of non-state enterprises reached Rmb411 billion, up 11.9%. As at the end of 2013, there were 57,032 private enterprises and 162,000 individually-owned businesses in Zhenjiang.
According to Zhenjiang’s Urban Commercial Network Plan and Zhenjiang’s Urban Commercial Facilities Distribution Plan (2010-2020), construction of the city will give emphasis to the ‘one principal, four subsidiaries’ format, which comprises five major commercial centres. The one principal refers to a city-level commercial centre, namely the Old City commercial centre, which is made up of a core zone and a support circle, with Daishikou being the core. The four subsidiaries are: the Nanxu commercial centre, Dingmao commercial centre, Guyang commercial centre, and Dagang commercial centre, each with different functions and positioning. The commercial district formed by these five major commercial centres not only features a competitive yet complementary environment, but also lays the foundation for the development of a new landscape in Zhenjiang’s commercial sector.
In recent years, following the completion of Suning Plaza (the tallest building in Zhenjiang located at Dashikou core commercial district), the construction of Taigu Legends commercial district, and the rise of Chengji (meaning “inter-city”) commercial district, the city proper has formed a layout comprising the three major commercial districts of Taigu Legends, Dashikou and Chengji. Moreover, in a bid to promote the development of tourism, Zhenjiang has mapped out plans for 11 specialty commercial streets, including the early 20th century-style street on Daxi Road, Xijin Ancient Ferry Street, gourmet and cultural street on Xinhexi’an Road, as well as Huangshan No.1 night market park. These projects are set to attract tourists and propel growth in the retail sales of tourist-related industries.
2. Zhenjiang’s Consumer Market
2.1 Growth in Retail Sales
Zhenjiang’s total retail sales of consumer products amounted to Rmb97.7 billion in 2014, up 12.7% over the previous year. Retail sales in the hospitality sector topped Rmb790 million, growing 19.1%; while retail sales in the catering sector amounted to Rmb9.93 billion, up 13.9%. Retail sales of different consumer goods were as follows: foods Rmb6.62 billion, up 4.5%; clothing, footwear, headgear and textiles Rmb5.81 billion, up 4.8%; daily-use articles Rmb1.62 billion, up 18.9%; gold, silver and jewellery items Rmb1.57 billion, up 6.7%; cars Rmb11.77 billion, up 5.5%.
As at the end of 2013, there were 17 commodities trading markets with sales exceeding Rmb100 million in Zhenjiang. Their total transaction amount during the year topped Rmb45.86 billion, a growth of 8.8% over 2012. Among these commodities trading markets, five had sales exceeding Rmb1 billion.
2.2 Per Capita Disposable Income and Consumption Expenditure
In 2014, per capita urban household disposable income in Zhenjiang was Rmb35,752, while per capita consumption expenditure was Rmb21,310. In the same year, car ownership per 100 urban households was 41 vehicles, a big jump from five vehicles in 2009. Ownership of computers per 100 households also rose from 80 in 2009 to 111 in 2014.
3. Characteristics of Zhenjiang’s Consumer Market
3.1 Population Structure
As at the end of 2014, the permanent population in Zhenjiang was 3.17 million, or 6,000 more than that at the end of 2013, up 0.2%.
According to China’s sixth population census, in 2010 there were 975,000 households in Zhenjiang, with an average of 2.92 members in each household, 0.12 persons less than 10 years earlier. Of the city’s permanent population, 51% were male, with 10.3% aged 0-14, 79.3% aged 15-64, and 10.4% aged 65 and above.
In Zhenjiang’s permanent population, 11.5% have reached university level, 18.6% have received senior high school education, 40.5% have received junior high school education, while 22% have reached primary school level. Compared with the fifth population census, which took place 10 years earlier, the number of people in Zhenjiang reaching university level rose from 5,044 to 11,509 per 100,000 people.
3.2 Characteristics of Consumers
Mass catering doing brisk business
Enjoying good food is the favourite pastime of Zhenjiang people. During meal times, business is brisk in the eatery areas in commercial complexes such as Wanda Plaza “golden street” and Yaohan. Also, restaurants offering different kinds of cuisine have mushroomed on the main streets and in small lanes across Zhenjiang. As people’s lifestyle change, they are eating out more often. In 2014, the sales of Zhenjiang’s catering industry amounted to Rmb9.934 billion, an increase of 13.9% over the previous year.
Keen demand for consumer services
With the ubiquity of smartphones, 4G and wireless networks, Zhenjiang people are becoming increasingly keen on making restaurant bookings, buying movie tickets and using all kinds of services online. As people are growing more and more used to the ‘Internet +’ model for eating out, large restaurants have launched public accounts on WeChat one after another so that consumers can make bookings online.
Spending on cultural, entertainment, leisure and tourism services in Zhenjiang has also been rising rapidly. According to statistics, as at the end of 2014, there were six 4A grade tourist spots and two 5A grade tourist spots in the city. The unique cultural landscape of Zhenjiang has attracted a great number of tourists, with total tourism revenue topping Rmb55.45 billion in 2014, up 14.5% over the previous year. With its rich local cultural flavour, events in the city including the Changjiang International Music Festival 2014 and “Hi Weekend” Zhenjiang cultural performance season 2014 were warmly received.
High-end consumption growing strong
The entry of well-known brands such as Cartier, Hugo Boss, Dunhill, Mont Blanc and Giorgio Armani into the commercial districts of Zhenjiang has accelerated the pace of urban consumption moving upmarket, which has in turn bolstered local people’s desire for high-end consumption. Nowadays, the number of Zhenjiang people going after new arrivals of luxury products is growing. According to incomplete statistics, big spenders are mainly mature consumers aged between 40 and 50. However, the hot sales of TANK watches, a trendy brand under the Cartier banner, in recent years indicates that young people have become a new force in luxury goods consumption.
3.3 Modes of Business Operation
In the last two years, the business environment of Zhenjiang has entered a multiple centre development era, under which the city proper and a number of new commercial centres in the neighbourhood are emerging, with HOPSCA (hotels, offices, parks, shopping, convention centres and apartments) being the mainstream. Zhenjiang Wanda Plaza, Zhenjiang Suning Plaza and Greenland Central Plaza have already become the landmarks of the city. Following the opening of several more commercial complexes in 2015, the commercial activities in Zhenjiang will be even more boisterous.
The major modes of retail business operation in Zhenjiang are comprehensive, including hypermarkets, department stores, shopping centres and specialty streets. Department stores offer both medium-range and upmarket products. With the entry of Yaohan and Suning Plaza into Zhenjiang, international luxury brands such as Cartier, Hugo Boss, Dunhill, Mont Blanc and Giorgio Armani have been making their way into the city one after another. Their presence has upgraded the local retail market to meet the demand of consumers for high-end products. As a result, people going out to Shanghai and Nanjing to shop in the past are now gradually moving back.
Where hypermarkets are concerned, more than 10 industry players, including Century Mart, China Resources Suguo, RT-Mart, Auchan, Wal-Mart, Metro and Yonghui Superstore are found in the city proper of Zhenjiang. Following the development of e-commerce, various physical stores in the city are now making use of online platforms to enhance their competitiveness. For instance, Ego Plaza, which specialises in digital products, has been trying to win the hearts of young customers via online platforms. Ffan.com, a commercial site jointly launched by Wanda Group, Baidu and Tencent, represents the move from physical store to e-commerce. Built on the foundation of physical store, the site attempts to establish its online empire by offering customers the convenience of parking and dining. In 2014, the transaction value of e-commerce in Zhenjiang exceeded Rmb50 billion. Online retail sales accounted for over 8% of total retail sales of consumer goods.
4. Profiles of Zhenjiang’s Major Commercial Districts
The Dashikou commercial district, starting from Mengxi Road in the east to Dianli Road in the west and with Jiefang Road as the boundary between north and south, is the only large-scale economic and commercial district in Zhenjiang so far. This district is home to RT-Mart, Yaohan, Taihe Square (太和廣場), Zhenjiang Commercial City (鎮江商業城), Zijin Pop Square, Diyilou pedestrian walk, Nanmen Street, with Suning Plaza under construction, forming a commercial cluster. As a city-level commercial centre, Dashikou commercial district encompasses shopping, catering, leisure, entertainment, tourist, cultural, financial and commercial facilities.
Zhenjiang people have a special memory of, and feeling for, Dashikou, just like Nanjing people have for Xinjiekou. But following the rise of the Chengji commercial district, Dashikou is no longer the only commercial hub of Zhenjiang. However, the existing scale and number of retail, catering and hospitality facilities in Dashikou are still the largest among all commercial districts in the city. In particular, following the entry of Suning Plaza, which is expected to strengthen and enrich the weaker sectors in Dashikou, such as cinema and catering, its position as CBD is bound to be further consolidated.
Zhenjiang Suning Plaza is scheduled to open for business in 2016. Housing international premium goods retail, catering, leisure and entertainment, mother and child products and services, supermarket, cultural and art facilities under one roof, this commercial complex can satisfy the different consumer demands of local people. Of the brands to be offered there, about 40% will be moving into Zhenjiang for the first time. In February 2015, Central Main Street opened for business, the first underground commercial street in Dashikou commercial district, complementing the commercial sector above ground. Central Main Street is positioned as a commercial project offering branded garments and accessories, leather goods, luggage, premium goods, decorative items, cosmetics as well as nail care, catering, leisure, entertainment and cultural services.
The Chengji commercial district is one of the urban commercial and trading centres named in Zhenjiang’s Urban Commercial Facilities Distribution Plan. Known for its youthful vigour, this commercial district has been growing since 2012, breaking Zhenjiang consumers’ habit of going only to Dashikou for food, drinks and entertainment. In terms of business nature, Chengji complements Dashikou by placing emphasis on commerce and modern services, with trendy and fast-moving goods, catering and entertainment being the mainstream.
Currently, the Chengji commercial district mainly houses the following commercial complexes: Wanda Plaza, Changfa Plaza, Zhonghao International Plaza, Lingcheng International Plaza (領城國際廣場), and Ego Plaza. In 2014, Wanda Plaza ‘golden street’ officially opened for business, giving full play to brand effect. The leisure and entertainment facilities it offers have drawn large crowds. After three years of development, Wanda Plaza has finally come of age, while Changfa Plaza, Ego Plaza and Guoxin Yihe (國信怡和) have still not been brought to completion.
In terms of geographical location, Chengji commercial district is situated at the transport hub of Zhenjiang, with the city’s leading public transport lines D1, D2 and 19 starting from here. The long-haul passenger terminal is also located here, bringing large numbers of people from neighbouring rural counties to the commercial district. According to statistics compiled by the commerce department, total visitor flow in the Chengji commercial district exceeded 60 million between January and September 2014.
The Dingmao commercial district, centring around Jingkou Square (京口廣場) and covering two areas at the crossroads between Xuefu Road and Jing Shi’er Road and between Guyang Road and Jing Shi’er Road, is the largest specialty goods retail area and regional daily-use consumer products distribution centre in Zhenjiang. In the past few years, Dingmao has planned and constructed specialised marts for auto accessories, building materials, hardware, small commodities and food products, covering a total area of 800,000 sqm. To date, Zhenjiang Yiwu Small Commodities City, Asia-Pacific Hardware City (亞太五金城), and Yidu Home Products and Building Materials City (億都家居建材城) have been completed and opened for business, forming a business operation system led by wholesale and supplemented by retail. There are 57 4S car shops in the Dingmao Road zone.
The population in the Dingmao zone is expected to grow to 250,000 in 2015. Currently, commercial projects in the district meeting the demands of this vast population include Zhejiang International Financial Tower, RT-Mart supermarket, Yihua Department Store and Butterfly Commercial Plaza. Construction of Dushihui Cultural Square (都市匯文化廣場) commenced in 2014. Positioned as a complex housing cultural, commercial and residential facilities under one roof, this project will bring in several cultural and commercial facilities, such as cultural and art museums, theatres and art exhibition halls. The project is scheduled for completion in December 2015. Upon completion, it will further invigorate the economy of Dingmao and enhance the competitiveness of its cultural industry.
Taigu Legends, located in the core area of Zhenjiang city, is the largest Old City renovation project in Zhenjiang. It covers a landmark super-tall hotel, upmarket shopping centre, specialty commercial streets, 5A grade office blocks, large residential communities, high-end urban residences and themed commercial streets.
Taigu Legends, part of the Sincere Group, includes shopping centres, street-level shops and commercial corridors. Among these, Sincere Starlight Plaza (協信星光廣場) is set to become a top-notch luxury goods shopping centre, home to such well-known brands as Chanel, Dior and Prada; while the Starlight Times Square shopping mall features medium to high-end brands, such as Muji and X Element.
The emergence of the Taigu Legends commercial district brings about yet another brand new commercial district in Zhenjiang’s city proper. With its presence, there will be three leading commercial districts in the city proper, namely Taigu Legends, Dashikou and Chengji.
The Binjiang commercial district is adjacent to Dashikou, with Zhaoshang Xiangbindao (招商香檳道), an upmarket commercial complex launched in 2014, as its landmark. The commercial district is said to have a population of 660,000 high-income earners and attracts visitor flow from within a 3km radius, including about 100,000 permanent residents in more than 10 mature communities, such as Dongwuxincun (東吳新村), Songshengyuan (松盛園) and Yangguang Century Garden (陽光世紀花園). Across the road from Xiangbindao, construction work has begun for Fenghuang Cultural Square (鳳凰文化廣場), which is an urban cultural complex in the Binjiang commercial district, housing large-scale cultural, leisure and shopping facilities under one roof. The brand new image and high-end business operation modes in the Binjiang commercial district signify the future development direction of Zhenjiang’s commercial sector.