Joseph Mariathasan: The trouble with Chinese shopping malls

first_imgEven in the malls catering to families, there may be longer-term issues. Shopping malls provide a pleasant excursion for many families, but, as one Chinese acquaintance admitted himself, they rarely go to the mall to purchase anything. Most purchases my friend makes are done online via his smart phone.Indeed, the ubiquity of smart phones across all levels of the population is replacing physical markets with access to electronic markets across the social spectrum. Flowers in Beijing and elsewhere, for example, are invariably grown in Hunan province in the south, where there is good sunshine, the right soil and water. In the past, the small-scale village growers would have taken their wares to a central physical market in Beijing, to be bought by flower shops. Today, the physical market no longer exists because small-scale growers can connect with the small shops selling flowers directly via an electronic market available through a smart-phone app.For tourists looking to spend some time in Beijing, choosing a hotel next to a shopping mall is an excellent idea. The ability to have a choice of restaurants of all types to take the family, before staggering a short distance back to the hotel room, is a better option than having to eat in the same hotel after a day’s excursions. Actual shopping in Chinese malls may be under threat from online shopping, but the mall as an entertainment complex is unlikely to face challenges. They offer a safe, warm environment that can provide restaurants, cinemas and entertainment ranging from ice-rinks to archery ranges. The only issue may be how to subsidise the shops they were originally designed to host. For investors in Chinese property, that may be a deal breaker.Joseph Mariathasan is a contributing editor at IPE Long-term investors in Chinese shopping malls should think twice, says Joseph MariathasanWandering around shopping malls and eating with friends in restaurants in Shanghai and Beijing can provide good insight into the developing trends in China. The contrast between a shopping mall in the business district of Pudong, Shanghai, and one in a predominantly residential part of Beijing, was stark. Sunday afternoon in Beijing saw extended families en masse, strolling around the mall.Many of the shops – including one branch of a hair salon found in the English market town where I live – would be familiar to Europeans and Americans. Large shopping malls with cinemas and plenty of space for kids to run around, plus a wide range of shops, are very popular with families in Beijing, particularly during what can be harsh winters. Given the bitter wind outside, I did not envy the fathers trying gamely to ice-skate with young children on a skating ring in the open. Sunday lunch at one of the many restaurants is clearly one of the main reasons many families are there, with Grandma often looking after the toddler – China’s one-child policy has been discarded, but it may take many years before there are many families with more than one child running around, accompanied in some cases by two doting parents and four more doting grandparents.In contrast, Shanghai’s shopping mall in the centre of the business district was almost exclusively high-end shops, ranging from Baby Armani to Japanese designer wear. I walked through it many times, to get to and from my hotel, but there was always one thing that surprised me. Despite the very pleasant staff – with some boutiques having five or more I could see, happily chatting to one another – something essential seemed missing. That was customers. Most shops invariably seemed empty of anyone actually determined to make a purchase. It suggests that such malls may face a challenging long-term future.last_img

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