31 July 2015
Zhongshan: Profile of a Consumer Market
1. Economic Overview and Development Planning
In 2014, Zhongshan’s GDP grew by 8% year-on-year to reach Rmb282.3 billion. The value-added of primary industries amounted to Rmb7.1 billion (+1.7%), that of secondary industries totalled Rmb156 billion (+8.4%), and industries reached Rmb119.2 billion (+7.8%). The percentage share of the three industry sectors to the city’s GDP stood at 2.5%, 55.3% and 42.2% respectively. Based on permanent population, per capita GDP of Zhongshan was Rmb88,282.
The private sector in Zhongshan is well developed. As at end 2014, the value-added of the private sector amounted to Rmb140.3 billion, growing by 7.5% from the previous year and constituting 49.7% of the city’s GDP.
Zhongshan is also a tourist destination. In 2014, it received a total of 9.02 million tourists, of which 8.42 million were domestic and 600,000 were foreign visitors. Total tourism income was Rmb21 billion.
Zhongshan will devote great efforts to developing the real economy, fostering clusters of emerging industries, and giving support to the development of such emerging sectors as health and medicine, new energy and yachts. The city will also actively participate in building an advanced equipment manufacturing industry belt on the west bank of the Pearl River, and emphasise developing such advanced equipment industries as smart manufacturing equipment, marine engineering equipment, and opto-electronic equipment. Action will be taken to develop producer service industries, including software and information service, R&D and design, inspection, testing and certification, and commercialisation of technological achievements. Meanwhile, steps will also be taken to nurture new growth poles in consumption and expand the scope of new consumer sectors, such as information, elderly care, health, culture and sports.
Zhongshan is an important transportation node in the PRD. With the opening of the Guangzhou-Zhuhai inter-city railway and the construction of the western coastal railway, the Hong Kong-Zhuhai-Macau Bridge and the Shenzhen-Zhongshan Line, Zhongshan is bound to become a transportation hub linking west Guangdong to Shenzhen and Hong Kong.
2. Zhongshan’s Consumer Market
2.1 Growth in Retail Sales
Zhongshan’s total retail sales of consumer goods posted double-digit growth in recent years. In 2014, the city’s total retail sales of consumer goods grew by 10% to Rmb98.2 billion. In the retail sales of enterprises above a designated scale during 2014, cars sales increased by 17.2%, sales of petrol and related products increased by 3.5%, while sales of home appliances and audio-visual equipment grew by 5.8%.
2.2 Per Capita Disposable Income and Consumption Expenditure
In 2014, the per capita disposable income of urban households in Zhongshan was Rmb34,304, while per capita consumption expenditure in 2013 was Rmb24,093.
3. Characteristics of Zhongshan’s Consumer Market
3.1 Population Structure
In 2014 the permanent population of Zhongshan reached 3.19 million, up 31.3% over the 2.43 million figure in 2005. Considering that the population of Zhongshan with household registration was only 1.56 million, it can be seen that more than half of the residents in the city were migrants.
According to China’s sixth population census in 2010, of the city’s permanent population, 53% were male, with 9.2% aged 0-14, 82.3% aged 15-64, and 8.5% aged 65 and above.
The education level of Zhongshan’s permanent population has been rising markedly, with 8% of the people having received university education, 21% senior high school education, 45% junior high school education, and 20% primary school education. Compared with the fifth population census, which took place 10 years earlier, the number of people in Zhongshan reaching university level rose from 2,640 to 7,775 per 100,000 people.
There were 900,000 households in Zhongshan, with an average size of 2.73 persons. The average household size had decreased by 0.88 person from 10 years earlier.
3.2 Characteristics of Consumers
Zhongshan is a prefecture-level city under the jurisdiction of Guangdong province. Together with Shunde, Nanhai and Dongguan, the four cities are known as the “four little tigers of Guangdong”. To cater for the majority of local consumers, the products offered in the city are mainly mid-range. Overall market positioning is not high, with products carried in most shopping malls being mainly domestic brands and some international brands. Among the shopping malls, Daxin Metro Mall and Yihua Square, positioned at mid-range and mid-to-top range brands respectively, have the best sales performance.
Zhongshan’s commercial facilities are highly concentrated in Shiqi District, where local consumers are the target customers. Department stores and street stores are the main modes of operation, such as those in Yihua commercial district, while shopping malls are gradually gaining popularity. The brands offered in most commercial districts in Zhongshan are not top-notch but are mostly first-line and second-line domestic brands, as well as some international brands. Hence, there is considerable room for expansion. There is a large group of high and medium income earners in the city who are willing to purchase luxury brands locally. However, luxury brands available in Zhongshan are relatively few.
The development of commerce in Zhongshan has evolved from street stores and department stores to supermarkets and hypermarkets. Today, shopping centres are the highest form of commercial development in the city. In the past few years, the number of large shopping centres in Zhongshan has increased rapidly. Comprehensive shopping centres, including Lihe Plaza and Central Power Plaza which house shopping, catering, entertainment and leisure facilities under one roof, have emerged one after another. These shopping malls, together with projects under construction, such as Golden Eagle Square, are bound to bring about a more diversified consumer market in Zhongshan.
Zhongshan is a city where local culture is strong and outside influence is relatively weak. Faced with a wide choice of goods and not knowing what to pick, consumers are likely to think that “one cannot go far wrong if everybody else is buying the same thing”. Also, Zhongshan consumers tend to attach great importance to whether a product is functional and practical, paying relatively little attention to brands. Most people are not willing to pay for a concept or brand merely because it looks attractive.
4. Profiles of Zhongshan’s Major Commercial Districts
There are five major commercial districts in Zhongshan, namely Sunwenxi (Sunwen West Road), Yihua, Jiari (Holiday Plaza) and Daxin, which are located in Shiqi District, as well as Fuhua, which is located in Western District. As the central urban district of Zhongshan where commerce first developed, Shiqi District is where most of the city’s business facilities are concentrated. Zhongshan’s retail market has expanded gradually in line with its urban development, from the traditional Sunwenxi commercial district, to Yihua commercial district which emerged in the 1990s, and to Daxin, Jiari and Fuhua commercial districts which sprang up after the year 2000.
Commercial complexes in the city proper mainly concentrate in Shiqi District and Eastern District. The three commercial complexes, Holiday Plaza in Jiari commercial district, Lihe Plaza in Yihua commercial district, and Central Power Plaza in Sunwenxi commercial district, are located close to one another within a distance of 2 km. These three are the core of their respective commercial districts.
Commercial complexes in nearby regions include: Daxin Metro Mall in the eastern part of Xiaolan town, which comprises the Daxin mall and Crowne Plaza Zhongshan and, together with Shunchang Shopping Mall in the southwest, forms the commercial core of Xiaolan new area; Royal Duke Plaza located in the new area north of Tanzhou town, houses shopping, hotel, offices, cultural and entertainment facilities under one roof and is the commercial core of the new area north of Tanzhou; Mingyang Century Square located in Dongfeng town which forms the commercial centre of the western part of Dongfeng town.
As one of the most established commercial districts in Zhongshan and backed by supporting facilities, such as the Bank of China Building, King Century Hotel, Yihua Department Store, Wal-Mart, Aeon and Lihe Plaza, developing gradually into a full-fledged financial and business district. In the vicinity of this district are many high-grade residential developments, such as Hengxin Garden (恒信花園), Nanhui Garden (南輝花園) and Junxuanting (俊軒庭). Residents are mainly people aged 30-40 with considerable spending power and lifestyle requirements. This has helped to expand the growth potential of this established commercial district.
Lihe Plaza, which opened for business in 2012 with a total floor area of 420,000m2, is the largest commercial complex in Zhongshan. Encompassing Lihe International Financial Centre, Hilton Zhongshan Downtown, Lihe International Residence and Lihe Plaza shopping centre, this complex offers high-end shopping, business and office facilities. Lihe Plaza is made up of two 55-storey towers. In 2012, the east tower was granted approval by the government to be named Zhongshan International Financial Centre, while the west tower is the five-star Lihe Hilton Hotel. This shopping mall has attracted H&M, Uniqlo, OSGH Cinemas, BLT Supermarket, Burger King and Kafelaku Coffee, brands new to the Zhongshan market.
Sunwen West Road pedestrian street
The century-old pedestrian street on Sunwen West Road and streets in its vicinity have become the largest and most bustling commercial district in Zhongshan. As well as the four-star Fuhua Hotel and five-star Zhongshan International Hotel, shopping venues in the district include Zhongshan Department Store, Zhongken Department Store, Business Center Plaza, and Central Power Plaza, which opened for business in 2013. In addition, the Guangzhou Friendship Store, specialising in high-end consumer goods, opened in this commercial district in late 2003, rendering the consumer market in Sunwen West Road pedestrian street even more comprehensive and diversified. The “Lan Kwai Fong of Zhongshan” by the side of Qijiang River, the first pub district in Zhongshan, has become one of most prominent tourist highlights of the city. Central Power Plaza is an extension of the historic culture of Sunwen West Road, with emphasis on building the image of cultural tourism. With shopping, leisure, catering, entertainment, tourist and boutique office facilities under one roof, the plaza has developed into an outstanding commercial landmark and tourist spot in western PRD. Currently, businesses including Parkson Department Store, Zara, CGV IMAX (from Korea), Watson’s, Laofengxiang, Chow Tai Fook Jewellery, Luk Fook Jewellery and City Chain have established a presence here. At the amusement park inside Central Power Plaza, there is a colourful 108-metre high ferris wheel, which is the tallest in the western PRD region and a landmark of Zhongshan.
Jiari (Holiday Plaza)
Holiday Plaza is located at the junction of Sunwen East Road and Xingzhong Road. It offers a combination of commercial facilities and 5A grade office space. With clusters of government offices and businesses in the neighbourhood, commercial development is robust in this district. Holiday Plaza has two office blocks, each featuring an atrium garden covering over 1,000m2. The plaza has already attracted the entry of a large number of well-known companies, including Zhongshan Boya Bookstore (art training centre), GF Securities, AIA, Zhongshan City Surveying and Mapping Co Ltd, and Zhongshan Commercial Enterprise Co Ltd.
Daxin Metro Mall
Daxin Metro Mall is the first large-scale shopping centre in Northern District. Other shopping malls in the district include Hangkei Department Store and Peak Hua 28 Square. The total construction area of Phase I of Daxin Metro Mall is 230,000m2. Phase II is located to the south of Phase I, and will be linked up with Phase I upon completion to form the largest HOPSCA (hotels, offices, parks, shopping, convention centres and apartments) in Zhongshan. At present, U-Best Department Store, which focuses on young ladies’ fashion, Carrefour, Gome electrical appliance store, Watson’s, and Yikang furniture plaza, targetting the high-end market, have already established a presence here. These stores have brought shopper traffic to this commercial district. Being a comprehensive shopping centre with catering, shopping and entertainment facilities under one roof, Daxin Metro Mall has attracted the entry of many large restaurants.
As Daxin Metro Mall is located in the vicinity of high-end residential estate, Ocean City, the purchasing power of shoppers in this commercial district is not to be overlooked. Daxin Metro Mall extends its reach beyond the central urban districts to the suburban districts of Shalang, Gangkou, Shaxi, Huoju (the “Torch” high-tech zone), Wugui Mountain, Nanlang, Huancheng and Banfu. In the long term its influence is expected to cover the whole of Zhongshan. Because of its well-planned business layout, trendy image, and the fact that it supplies goods of all grades, it is able to cater for the needs of most consumer groups.
Guangzhou, Humen in Dongguan, and Fuhua in Zhongshan are dubbed as the “Golden Triangle” of garments and accessories wholesale in the PRD region. As early as in the mid-1980s to early 1990s, before Humen became a fashion wholesale market, Zhongshan was already a well-known garment wholesale market, attracting business operators from all over the country. In the case of Fuhua, as this commercial district becomes more and more mature, a large-scale garment distribution centre has been formed with National Highway 105 and Fuhua Road as the axis. Examples of garment and other markets located here include: Fu Yip Plaza, Mingxuan Plaza (明軒廣場), Longrui International Garment City, Fashion City of Clothing, Yunhan garment market (雲漢服飾市場), Xijiao small commodities market (西郊小商品市場), Shuiniucheng (水牛城) and Zhongnan garment mart (中南服飾廣場).