The Rise Of China’s Megacities: Good For Business?

Six Cities – Tianjin, Guangzhou, Shenzhen, Chongqing, Chengdu and Wuhan – Expected To Join The “Megacity” Ranks, With Real Urban Populations Exceeding 10 Million, In Next 15 Years

Six cities should join the ranks of "megacities" like Beijing and Shanghai in the next 15 years. Who will cash in on the new opportunities that will arise?

Six cities should join the ranks of "megacities" like Beijing and Shanghai in the next 15 years. Who will cash in on the new opportunities that will arise?

One of the greatest engines of China’s rapid economic growth has undoubtedly been the massive in-migration of the rural population into the wealthy coastal area. Although this influx has slowed, and even reversed somewhat, as a result of the global economic slowdown, for China’s major cities, its cosmopolitan centers, urban population growth is expected to continue growing for at least the next 10-15 years. As China’s top-tier cities, Beijing and Shanghai, become even more competitive and second- and third-tier cities present young professionals with better job options, the rank of Chinese “megacities” — cities with populations exceeding 10 million — are expected to be joined by six cities: Tianjin, Guangzhou, Shenzhen, Chongqing, Chengdu and Wuhan. According to a post today on FT’s Dragonbeat blog, the rise of the new Chinese megacity will present new challenges for urban planners. However, I think they will also present unique opportunities.

Tom Miller writes for the Financial Times:

Managing [China’s] vast migration in a sustainable manner will require more than steel and cement: creating patterns of urban growth that use resources efficiently and avoid irreversible urban sprawl will determine whether the country’s cities become livable economic centres or urban dystopias fugged up with exhaust fumes.

One city attempting to face up to this challenge is Wuhan, the largest city in central China, which already has a population close to 10m if you include its large floating population of migrant workers.

At Wuhan’s northern edge, where vegetable patches tended by bent-backed farmers are flanked by the city’s massive steelworks, the city government is attempting to transform a rural-industrial no-man’s-land into a shiny new suburb.

Down the road, a giant railway station (Wuhan’s third) and a 6km bridge (the city’s fifth to cross the Yangtze) are both nearing completion. By the river bank, where freshly planted grass lies forlornly under a fine layer of grey dust, workmen hammer at apartment blocks for the suburb’s new residents.

The new suburb is part of a city plan for 2020 that planning officials hope will house a rising population without crippling the city’s infrastructure. According to the plan, the population of the city centre will be kept to 5m, while the overall population of the city centre plus suburbs will rise to nearly 12m.

Herein seems to lie the key to China’s future “megacity” — the middle-class “suburb.” Hopefully, planners will have learned from the American suburb, which many find to be out of step with the country’s current needs and hopelessly anachronistic, but no matter what shape they ultimately take, it will be the middle-class consumer in these second- and third-tier cities that provide the real sustained growth for businesses in the long term: from luxury brands (as we’ve discussed before) to automobile dealers (ditto) and everything from mall developers to art dealers and auction houses, all manner of companies and organizations should currently be formulating plans to dovetail with urban planners’ grand schemes for China’s current “big” cities and future “megacities.”

As we have seen in our recent post about antiques collectors springing out of the semi-rural woodwork, I think it’s interesting to think of the potential in the Chinese suburban areas for the luxury and art markets in particular. Automotive and real estate markets will always be in demand in these areas; the new thing will likely be “showing off” in a way that is harder to see in places like Beijing. With the potential for individual homes in these newer urban centers, we may be seeing a huge potential open up for steady growth of luxury goods (appealing to car owners looking to accessorize their vehicles, or home owners who want the newest popular designer’s furniture) and art (either for individual collectors to decorate their homes, or for the possible museums that will probably pop up in new urban centers).

Although this is just a shot in the dark, just as the United States’ rapid development in the postwar era signaled the rise of the second- and third-tier city, and all of the consumeristic trappings — both for good and ill — that their rise brought, the new Chinese megacity will present a wide range of difficulties and opportunities for everyone involved. We’ll just have to wait and see which brands and companies capitalize first.

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