The news that Shanghai has issued licenses for a number of new retail mall construction projects across town will make some developers groan with the prospect of yet more unwanted competition. But others are not content to follow tradition, sit on their backsides and wait for customers to come to them (a strategy that all too often leads to half empty, under-performing malls anyway). The interesting new Channel 1 mall has the advantage of a well-designed building and some top retail draws such as Zara and H&M despite being somewhat off the Shanghai retail grid. This summer, they pulled out the stops to attract the young, hip crowd they’re looking for and every weekend throughout July and August ran concerts by local bands including Pinkberry and The Mushrooms. This was certainly a step up from the usual entertainment mall customers usually get – amateur cheerleaders dancing out of step as they promote some brand of yogurt.
Last month I noted the rise of the smart-casual brand retailers that are now taking sales from the plethora of sportswear brands and retailers. There’s no question that these new casual brands entering the market want to differentiate themselves from the sportswear sector. Columbia is one such new arrival, opening stores in Beijing and Shanghai, and positioning itself as distinctly more of a smart-casual brand than an outdoors/sportswear brand. So where are the Chinese smart-casual brands to take on the likes of Zara, Vero Moda and Mango? Surely it can only be a matter of time before they appear.
Foreigners getting all the action from the rise of smart-casual wear is a relatively new phenomenon, but foreign dominance has always been the way for higher-end appliances and kitchen equipment. Now domestic player Haier hopes to redress the balance by moving up market at home and abroad. With middle class homeowners in China already familiar with Haier and Western consumers looking for bargains in these recessionary times, the white goods giant may finally make the breakthrough and consequently achieve better margins.
Enough of selling stuff; what about making it? Like a lot of analysts, my interviews with manufacturers indicate that orders are returning and factories hiring – skilled labor appears scarce once more. In textiles we started to see reordering a few months back as the shelves of Western retailers began to empty. But though this is good, it’s not yet back to early 2008 levels.
Major clothing chains in Europe and America say their like-for-like sales across the second half of 2008 and 2009 are still generally negative, but, crucially, not as bad as in late 2008 and early 2009. Most companies tell me that their buying from China for the fourth quarter of 2009 is, on average, down 10-15% based on lower sales but at higher prices (versus 2008’s heavily discounted sales). It seems to me that a 15% retraction in demand is acceptable for a Chinese factory owner as it’s still better than the dark times around the turn of the year. If this is a stable level of demand then at least it allows factories to plan ahead to a greater degree than they have for 18 months now.
Shanghai is in the midst of a building frenzy ahead of the Expo. Whether road widening and the destruction of so many old buildings will make the city more or less livable depends on your point of view. But I think it’s good news that Shanghai will adopt the odd-even system of number plates used in Beijing last year to ease traffic congestion. The system is still going in the capital and seems to have made the place slightly calmer and cleaner. Hopefully the same can happen in Shanghai. Inevitably, proud car obsessives in Beijing moan about it but my impression is that most people have gotten used to it and appreciate the benefits.
