Posted on 09/01/2007 9:09:44 PM PDT by JACKRUSSELL
(Beijing) - For a closer look at China's sizzling economy, walk the marble floors of Beijing's latest luxury mall. From its Japanese-style food court selling $4 chocolate éclairs to its glittering floors of branded international fashion, Shin Kong Place is a palace of conspicuous consumption.
The only thing missing, on a sizzling summer afternoon, was customers. Sales staff idled at display racks as a trickle of young visitors looped around the frigid mall. Most were content to window-shop, dreaming of the day when they could afford to drop $100 on a tassled tote bag. "These prices are too expensive. People can't afford it," says Xu Tao, a car repairman who was visiting with his girlfriend.
As investors continue to pour money into malls, analysts say the signs of a real estate bubble are growing, as are predictions that some retailers may be heading for trouble. Empty malls are just one indicator of an overheating economy – growing at its fastest clip in over a decade – that is proving hard to cool.
To curb rising inflation, led by food prices, China's central bank raised interest rates last week for the fourth time this year. Real estate is also in the spotlight: Property companies were ordered in June not to borrow offshore. But the race to build goes on.
"The problems of overheating are already apparent," says Wang Yao, director of the information department for the China General Chamber of Commerce, an industry umbrella group. "The commercial real estate industry is facing problems. After some buildings are finished, nobody wants to rent space."......
(Excerpt) Read more at csmonitor.com ...
Shoppers search for coats in a mall in this August 2005 file photo. (Andy Nelson - staff)
A Chinese shopper pushes a trolley past a row of washing machines in a shopping mall in this June 2005 file photo. (Ng Han Guan/AP/file)
Lead laden products are obviously not on sale.
I’ve shopped in a few 10 story malls in Shanghai. I was very impressed with the design and shocked at the cost of the products. Levi’s were about $120. Some of the restaurants were fantastic. I even saw a Kenny Rogers Roaster in one of the malls. That one freaked me out a little.
It’s a flashback to GUM, the department store showplace of the waning years of the USSR. An epic tribute to a mighty nation whose economy could produce luxe consumer goods, but whose citizens couldn’t afford them.
Actually, I don’t even think they were allowed to try. GUM was for tourists and Party honchos.
Proof the Chinese are undervaluing their currency 3-4x.
Here I thought we needed to trade with China to access their huge market. /sarc
There are failed malls (and other commercial property) all over the booming coastal areas. Many just stay empty, because property taxes are negligible. The Chinese consumer base just isn’t that big yet, because of relatively low salaries (about 1/10 American salaries).
hmmm wonder how many cat engines are for sale there :P
We were in Guangzhou and they had an floor in our hotel dedicated to upscale stores that sold name brand clothing, etc. The prices were outrageous and the stores were empty. We needed to purchase an iron, so we had our cab driver take us to the regular government department store. The iron was cheap enough, and the store seemed to hold anything one might need, but still obviously above the average Chinese workers wage because the store was empty we were about the only customers. (no AC and no elevators made for an interesting shopping experience.)
I’d bet that the same stuffs that are available in the malls, are available at a fraction of the cost in wholesale “outlets” and flea markets in the parts of the cities where foreigners don’t usually go.
Those malls look amazingly empty, if not for the above reason.
Lots of food, you just can't eat any of it? "Edible food" becomes a precious commodity, thus the price increase? Just yappin'...
Very interesting article - Thanks!
I have heard, but cannot prove, that it is import tax laws that drive the price up. They are made in China for the American market. They are then shipped back to China. All transactions are taxed. Add that to trendy stores and you end up with high prices. This is similar to the pre-American Revolution molasseses trade.
I have not gone to Guangzhou yet but may in the future. I would not doubt your observations. There is a definitely a huge spread in wealth of a few and the average person. What the average people can afford is much less than here. I saw some people in Suzhou that looked like they could not afford the simplest of needs. When the people in the US complain about being poor they should get a reality check with a place that is really poor.
There are different grades of malls. The high end malls in this article feature items you won't find in the kinds of malls most Chinese actually buy things from. The average Chinese can't tell designer labels from non-designer labels - many foreign labels just aren't promoting themselves in China. Because the market isn't there. There are mid-range stores that carry foreign labels, but the prices are very close to American levels, which again means the Chinese market is limited. Genuine Nikes are typically $50 or more.
I had this person I knew who visits China regularly and he buys many of the branded wares that’s made in China from factory-outlet-ish stores near the city thickets.
He used to say that the Chinese aren’t as brand-crazy as the rest of us, and they are often quite adamant that they get all their money’s worth. Hence, they rarely buy from over-priced malls, especially when they can get as-good-as-original knock-offs, or branded, factory-floor-price originals, elsewhere.
I think that depends on where they are from and what age group.
Several times a year I have to entertain groups from Shanghai. They all shop for things like Nike sneakers, Levi’s, Centrum vitamins, Hershy’s chocolate and high end cosmetics. I also know people from Zhangjiang and Urumqi that are not brand hounds. I guess it is just like here. Some want brand names and others don’t
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