22 Dec 2014
Shanghai: Market Profile
Major Economic Indicators
Shanghai has a total area of 6,340.5 sq. km, consisting of 18 districts and one county. Total resident population stood at 24.15 million by the end of 2013. Shanghai is one of the 4 autonomous municipalities and historically a commercial and financial center of China.
Located at the heart of the Yangtze River Delta, Shanghai is not only the leading container port in China, but also the busiest container port in the world in 2013 which handled 33.6 million TEUs in 2013, up 3.3% from 2012.
In 2013, 62.2% of Shanghai’s GDP was attributed to services industries. The top 3 largest industries were retail and wholesale, financial services and real estates. Shanghai will focus on the development of financial services, logistics and cultural industries.
Shanghai plays a key role in China’s heavy industries. Heavy industries accounted for 78% of the gross industrial output in 2013. Baosteel Group, China’s largest steelmaker, and Fosun Group, one of China’s largest private steelmakers, are both located in Shanghai. Auto manufacture is another important industry and there are 4 directions for its auto industry: to develop its own car brands, to cooperate with Japan and Korea car companies, to accelerate the development of business use cars and to promote the autoparts and car service industries. Shanghai is also a leading producer of ethylene, plastics, microcomputers, ICs and mobile phones.
Shanghai has been undergoing major industrial restructuring over the last decade. The share of low value-added manufacturing has decreased significantly, particularly the textile and heavy-equipment manufacturing industries as many of them have relocated to outside Shanghai.
Shanghai is China’s financial center. By the end of 2013, there were 1,240 financial institutions, including banks, insurance companies and securities companies, of which 215 were foreign-invested. The set up of the market operation head office of the People’s Bank of China in Shanghai in 2005 has further strengthened the importance of Shanghai as a financial center.
High-tech & Modern Industry Development
Shanghai has made significant progress in developing its high-tech industries, such as computer, telecommunications equipment, and integrated circuit manufacturing. Technology area with the most output value of the high-tech industries is electronic computers and office equipments. The six key advanced industries (including electronic information product, automobile, petrochemical, fine steel, equipment complex, bio-medicine) accounted for 67.3% of the gross industrial output in 2013.
Shanghai is a major tourist destination. In 2013, the number of domestic tourists grew by 3.6% to 260 million but overseas tourists dropped by 5% to 7.57 million.
The leading overseas markets in 2013 were the US, the EU, Japan, the ASEAN, Hong Kong and the Middle East. The EU was the leading source of imports, followed by the ASEAN, Japan, the US, South Korea and Taiwan. In 2013, Shanghai exported US$16.8 billion to Hong Kong and imported US$742 million from Hong Kong.
Shanghai is a major destination for foreign direct investment. By 2013, multi-national companies have set up 445 regional headquarters and 366 R&D centers in Shanghai.
In 2013 Shanghai accounted for about 14.3% of China’s total utilized FDI. The city’s cosmopolitan character, sophisticated and affluent consumers, and highly educated and skilled labor force make it highly attractive to overseas investors.
In recent years, thanks to liberalizations in the services sector, foreign investment in the services sector has increased more quickly than in the secondary sector. Of the utilized FDI in 2013, the secondary industry accounted for 9.7% and the tertiary industry accounted for 90.1%.
Up to 2013, the cumulative total of utilized FDI reached US$151 billion where the secondary sector accounted for 34.7% and the tertiary sector accounted for 65.1%.Hong Kong is the largest source of overseas investment in Shanghai. In 2013 Hong Kong investors signed 1,550 contracts with contracted amount of US$15.3 billion, and the utilized FDI invested by Hong Kong reached US$8.4 billion or 49.8% of the total utilized FDI in 2013. Other major investors in 2013 came from Japan, US, Singapore and Germany.
Shanghai is the largest consumer market among all mainland cities, supported by the rising income level and large inflow of tourists. Shanghai consumers are also being viewed as trend-setters for fashion and lifestyle products among the whole country.
Shanghai’s retail sector is developing rapidly. Shanghai’s per capita disposable income of urban residents reached RMB43,851 in 2013, increased by 9.1% from 2012.
Major foreign retail enterprises in Shanghai include hypermarkets like Carrefour, Walmart, Metro and Lotus Supercenter and department stores like Isetan, No.1 Yaohan and Pacific Department Store etc. Supermarkets and convenience stores are mainly local enterprises.
Franchised chain stores from Hong Kong such as U2, G2000, Baleno, Bossini, Giordano, etc. have also entered Shanghai. Famous Hong Kong brands in Shanghai included Esprit, Chow Sang Sang, Chow Tai Fook and Luk Fook.
Shanghai has strong distribution power in China, especially in the Eastern region and Yangtze River Delta. And foreign brands often choose Shanghai as point of entry into the China market. Domestic tourists and travellers used to visit Huaihai Road and Nanjing Road for a glimpse of the latest trends in the Chinese marketplace. The shopping malls on the Nanjing road, Huaihai Road and in the Xujiahui Business Center are filled with people everyday, displaying the most stylish chic in the world.