Outward bound

As suburban projects expand the
boundaries of China's major cities, a new consumer culture is emerging. Older people
bemoan the lack of a community spirit but younger generations are drawn to the open
spaces.

The once lively old neighbourhoods along Shanghai's Jiangiio
Road now lie in ruins. They have been levelled to make room for a project by Hong Kong
developer Hutchison Whampoa.
"The old must go to make way for the new," Mao
Zedong once said in an altogether different context. And so they have. The former
residents of Jianguo Road, situated on the southern edge of the old French quarter, have
moved on to suburban developments over the Xupu Bridge in west Shanghai, nearly one
hour's commute from the city centre. But as they move to homes in Shanghai's new
suburbia, these populations are part of a story much bigger than Li Ka Shing's latest
project. That story is about a fundamental change in China's consumer landscape.
In
China, suburbanisation is only begin-ning to get the attention it deserves. As early as l980,
Zhang Tingwei, a professor at Shanghai's Tongji University, developed his own theory on
the origins of suburbanisation, based on studies of North American cities. His study
showed that suhurbanisation emerges as per capita GDP reached US$2,500 at 1980 levels
and ears begin to enter the family. When per capita GDP reached US$5,000, ears become
widespread and suburhanisation intensifies. But these thresholds were then too remote to
have any relevance for average Chinese.
Still, even as academies sought to discern the
pattern of China's future development based on the Western experience, suhurbani-sation
was launched without fanfare by governments in China's major cities. The pattern was very
different from what Zhang had described. The first outward migrations were employed to
address inefficient land use in cities like Beijing, Shanghai and Guangzhou. While this land
was occupied by crowded and unsanitary housing, developers such as Hutehison
Wliampoa were queuing up to build new urban commercial and residential projects. So the
old residential neighbour-hoods were systematically demolished and the residents
relocated to new, low-rise sub-urban developments.

Virtuous circle
Sam Crispin, a
Shanghai-based real estate analyst, refers to this development pattern as a "virtuous
circle". As city governments raised money through the sale of urban indus-trial or
residential sites, this capital was rein-vested in suburban infrastructure. In turn, new urban
development projects drove up property values further, enabling the sale of more land,
freeing up more capital for subur-ban infrastructure, and so on.
This pattern is still being
replayed in China's major cities, Jianguo Road being the latest example in Shanghai. And
it is still generating massive interest in the real estate sector. "This is a very exciting stage
of development," says Crispin. All improvements in the urban landscape housing, roads,
rail, office buildings and shopping centres, combined with strong economic growth create
positive feed-back for the each other. So real estate val-ues maintain a sustained upward
curve."
But this is no longer just about real estate. As Crispin points out, suburbanisation
should have major implications in a number of areas. "The family leisure industry,
automobiles, suburban shopping and so on will all benefit enormously from this trend," he
says.
Indeed, as the trend gathers speed, the sub-urbs are emerging as a force in their
own right. Attention is turning increasingly to related markets. Retailers, for example, have
noticed a huge fall-off in the number of shoppers visiting Beijing's urban retail district of
Wangfujing in recent years. Where have they all gone? To the suburbs, naturally, where
many former city centre residents have been relocated.
The trend is the same in
Shanghai. Reed Hatcher, who heads up research at real estate services company DTZ,
says municipal fig-ures show that 70,000-aO,000 households have been relocated from
the city centre to outlying areas in each of the past five years. Consumer traffic in
fashionable shopping areas like Nanjing Road is now dominated by out-of-town
populations, while locals are drawn increasingly to outlying shopping areas in places like
Xujiahui, which lies about 8km west of the city centre.
So, as city residents move out to
the mar-gins, China's booming consumer market is moving with them. Foreign
hypermarket operators, 'such as Germany's Metro, France's Carrefour and Thailand's
Loms, are all estab-lished in the market and scrambling with domestic players for market
share. Mean-while, this fierce competition is putting fuel back into the suburbanisation
drive. Super-markets and hypermarkets are under increas-ing pressure to provide quality
and compre-hensive product offerings at competitive prices. To achieve this, they require
more space and better logistical networks. That means cheaper land and less congestion
in the suburbs becomes increasingly attractive. Another advantage in the suburbs, of
course, is more convenient access for consumers.
Carrefour, the world's second
biggest retailer, has opened more than 30 hypermar-kets in China (six in Shanghai alone)
and is now looking to launch its Champion super-market brand here as well. The shadow
of the world's number one retailer, Wal-Mart, should also loom large over the coming few
years. In late 2002 it teamed up with China International Trust & Investment Corpo-ration
(Citic) to form East China Wal-Mait Stores, which will work on expanding retail outlets in
Shanghai and the surrounding region. Tesco, the British supermarket operator, is also
looking at entry options.
Suburban malls those hallmarks of American life are on the
cards for China, too. Shanghai's Super Brand Mall, located on the riverfront in downtown
Lujiazui, grabbed the headlines last year with its 250,000 sq metres of retail space.
Despite the press fren-zy, however, most of that space is still empty. It will be dwarfed by
the gargantuan 330,000 sq metre Rainbow Mall, which is being built in Puxi's Gubei district
and should open sometime next year. Rainbow will no doubt give the suburbanites of west
Shanghai even fewer reasons to cross the river.
But the issue is not just about more con-
sumers in suburbia. There is also a lot more suburbia in consumers these days. Lately,
advertisements brim with visions of the good life in the suburbs trees, verdant lawns and,
most important of all. space. It appears that locals are buying it. "Chinese people are
beginning to appreciate space. Space is a lux-ury that has been so out of reach that it has
not even been aspired to, simply because no one knew what it meant," says
Crispin.
Suburbia once seemed an unpleasant choice, if you had the luxury of a choice.
Now, the suburbs are seen as quieter, cleaner, greener and much cheaper alternative to
downtown. The notion of 'living in the sub-urbs and working in the centre' has become a
widely accepted way of life, and is no longer merely the choice for foreigner and Tai-
wanese. In fact, Crispin says that about 90 per cent of development in the suburbs is being
driven by local demand. "The Chinese char-acter is being reinvented," he says.."Subur-ban
living is not for everyone, but there are plenty of overseas Chinese in Europe, North America
and Australasia that have discovered the benefits of the suburban lifestyle.
"The key
issue is that, while distances remain the same, travel times fall dramatical-ly what may
have been a two-hour drive from the city centre becomes a 30-minute drive on completion
of a new highway. Sub-urban properties are also more affordable because land is cheaper.
Buyers can have more space or a lower total outlay. They have a choice."
However,
Hatcher says many find it diffi-cult to make the adjustment: 'While some locals share a
[positivel view of the suburbs, I would say that far more have relocated to Shanghai's
suburbs out of necessity – either as a result of losing their homes to develop-ment
downtown, seeking to relocate to near-by industrial zones for work purposes or due to the
relative affordability of apartment space there."
Certainly, not everyone is enthusiastic
about the suburbs, even in places like Xinzhuang in the far west of Shanghai, which
contains brand-new aparurients and plenty of green space. This is especially true for those
who have been forced out of their homes to make way for new developments.
Ma Aiyi,
who recently moved from the centre to a small apartment block in Xinzhuang, misses the
convenience of local shops and the sense of community. "Those of us of the older
generation find the change hard to bear," she says. "It used to be that every time we went
out, we would see others, say hello, ask how they were. If you had a problem, someone
would always help you out right away. But after we moved out to the suburbs, we found that
that kind of culture had disappeared."

Emerging car culture
Another factor to look
out for over the next few years is the rise of the private ear in China, which Professor Zhang
once suggest-ed was so central to the very notion of subur-banisation. Car ownership,
which allows for more mobility. could open up new markets. And, for better or worse, China
is making every possible effort to ensure ears enter the family in a big way over the next
decade. There are now more than I am privately owned ears in the country, according to the
latest official data.
In an article on suburbanisation last year, Yuan Qiming, a researcher
at Tianjin Univer-sity's school of architecture, wrote that because the ear industry is a
strong force in industrial development in general, China is emphasising the auto industry
in industrial policy planning and is making a concerted effort to encourage the
popularisation of indi-vidual ear ownership". Many of these poli-cies are already working,
says Angela Gu, an analyst with Automotive Resources Asia in Shanghai. "Nationwide, as
infrastructure improves and many policies and rules are relaxed, the cost of car ownership
is moving down," she says.
China's emerging ear culture can already be glimpsed in
suburban areas. "The subur-ban developments are especially geared to accommodating
Shanghai's emerging ear culture – every house has a garage for a start. The locations are
in many eases only feasible for residential development because of increasing ear
ownership," says Crispin.
"Discussions at architects and developers now centre around
whether one car garage is enough or whether two ear garages are a
requirement."