The city of Nanjing, in eastern China’s Jiangsu province, was the capital of 10 dynasties and several colonial powers. It fosters among its citizens a taste for prosperity, high standards of living, and entrepreneurship. And this history of power—and retail—is playing an important role in shaping Nanjing’s retail profile in the present.
“Retail trade is a traditional occupation in eastern China, and ‘Jiangsu businessmen’ were an influential group in China’s history,” said Yin Rending, vice-general manager of Suguo Supermarket. “Jiangsu is a prosperous place with strong purchasing power, making it the ideal location and the potential target market for retail businesses.”
Nanjing attracts about 20 million shoppers annually, generating more than 10 billion yuan ($155 million) in sales of clothes, cosmetics, and appliances. In 2010 retail revenue reached 227 billion yuan—an increase of 18.5 percent over 2009, and nearly double the revenue of 2005. The city boasts a total gross domestic product of 508.6 billion yuan.
“During holidays, especially Christmas, the parking lots outside the malls are full of cars from outside Nanjing,” said James Kong, general manager of the Golden Eagle International Retail Group, which is based in Nanjing. “Nanjing is slowly becoming the buying center for the surrounding cities.”
Nanjing is only 300 kilometers northwest of Shanghai, another Chinese buying center—and a place that many may assume would be serious competition for Shanghai. However, Nanjing makes a point to position itself differently.
“Shanghai is an international city which serves consumers from all over the country, and is certainly the destination for high-end consumers. Nanjing, on the other hand, targets middle-class consumers’ needs,” one official from the Nanjing Chamber of Commerce said.
Nanjing, in accordance with the Chinese government’s 12th five-year plan, intends to double citizens’ salaries in the next five to six years.
“Nanjing has more than 300,000 middle class families with annual revenue of over 100,000 yuan and they are our target customers,” said Kong. “We are not targeting the top of the pyramid, but the emerging middle class, which is the backbone of purchase in Nanjing, as well as in China.”
This makes Nanjing more of a domestic market—and a likely barometer for the developing tastes of the Chinese middle class. Air conditioning company Suning Appliance already uses Nanjing to predict national trends.
“Nanjing consumers are always one step forward than most other regions in China,” said Bian Nong, Suning’s general manager in Nanjing. He cites Nanjing consumers as partial to “fancy electronics” and willing to spend more for energy efficient appliances.
And although appliances and other less-glamorous products rule the revenue in Nanjing, luxury sales are gaining a foothold as well.
“Young ladies are more willing to spend money on big brands, especially on cosmetics, bags, and clothes,” said Fu Duxun, general manager of Nanjing Xinjiekou Department Store. “Some even save for a year to reward themselves with an authentic Hermes.”
But, Fu notes, the cost of luxury products in China after import taxes has led many Chinese to make their luxury purchases overseas. This trend worries Fu and other domestic retailers.
“It is a good thing that Chinese customers are rich enough to consume luxury products; but I really hope the import policy can be adjusted accordingly, so that retailers can gain from the luxury products boom, and help boost domestic competition,” said Fu.