Tag Archives: shanghai

Shanghai’s Luxury Hotel Market Heats Up Ahead Of World Expo

Construction Of New Hotels, Expansion Of Existing Chains Shows That Shanghai Is Well On Its Way To Becoming Asia’s Top Financial And Business Hub

The Peninsula Shanghai is designed to emulate the city's Jazz Age style (Graphic courtesy Peninsula Hotels)

The Peninsula Shanghai is designed to emulate the city's Jazz Age style (Graphic courtesy Peninsula Hotels)

Over the past few years, in preparation for the 2010 World Expo, Shanghai has become one of the world’s top destinations for hoteliers looking to get a piece of the Chinese business and luxury traveler yuan. With upwards of 7 million visitors — mainly Chinese — expected at the expo, newly constructed hotels have added nearly 4,000 five-star rooms to the city’s already vast luxury hotel market. The question is, after the World Expo party ends, will 2011 bring a sustained flow of business and luxury travelers to Shanghai? Or will the city’s massive building boom lead to lingering overcapacity?

Today, the Independent UK looks at the city’s five-star hotel explosion, and discusses how the relatively low impact of the global economic downturn on the Chinese market has given some hoteliers hope that overcapacity is a word they’ll never have to use in major Chinese cities like Shanghai:

The opulent Peninsula, the only new building on the main part of Shanghai’s historic Bund in 60 years, just opened, embracing the city’s Jazz Age heyday with a chauffeur-driven 1934 Rolls Royce Phantom and a Great Gatsby-esque pool.

The Peninsula’s owner, Hongkong and Shanghai Hotels Limited, is making a return to the “Paris of the East” where it was founded after a 60-year absence, but it is facing stiff competition.

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Conspicuous Consumption “Here To Stay” In China: How Will Retailers Take Advantage?

Luxury Market In China A Mixed Bag For Foreign Brands, Who Fight To Get Customers To Buy Inside China Rather Than Traveling Overseas

Although Beijing and Shanghai are China's "crown jewels," second-tier cities like Chongqing may ultimately prove the engines for the creation of a more comprehensive Chinese consumer culture

Although Beijing and Shanghai are China's "crown jewels," second-tier cities like Chongqing may ultimately prove the engines for the creation of a more comprehensive Chinese consumer culture

We’ve discussed recent reports on the rebound of the Chinese luxury market (which didn’t drop that much to begin with, despite global economic woes), and this year’s findings in McKinsey & Company’s Insights China report that China is rocketing towards the top of the list of the world’s biggest luxury markets. Although China remains one of the only bright spots in the world of luxury retailing at the moment, foreign luxury brands — despite rapid growth in the mainland market — often have difficulties convincing many of the country’s highest-potential customers (the wealthy and super-rich urbanites in top-tier cities) to buy their products within the mainland, strangely enough, because of the large luxury tax China levies on high-priced imported goods.

Possibly to combat this problem, as we’ve seen this year, many companies are looking towards second- and third-tier cities as a source of future growth, and perhaps leaving the top-tier cities alone and letting their Beijing or Shanghai boutiques function only as “showrooms” for ultra-rich customers who’ll simply buy the products on their next overseas or Hong Kong/Macau trip. In these smaller urban areas, middle- and upper-middle class customers, who still want to differentiate themselves through conspicuous consumption but are most certainly not part of the economic elite, could be the key for luxury brands who want their China locations to actually sell things rather than simply show them off like a real-life catalog. Middle- and upper-middle class urban professionals in cities like Xi’an, Qingdao, Nanjing and Chongqing — who make a decent living but can’t afford to fly to Hong Kong or Macau (let alone Paris or Tokyo) for luxury shopping sprees — are likely going to buoy luxury brands’ losses in top coastal cities.

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Some Of The World’s Top Wines To Be Presented At HK Shangri-La In November

Hong Kong Quickly Becoming One Of World’s Top Destinations For Vintners As Number Of Chinese Wine Aficionados Jumps

The PFV will bring its top wines to Hong Kong in November

The PFV will bring its top wines to Hong Kong in November

We’ve looked at the growing number of wine drinkers in mainland China quite a few times in recent months, particularly in the wake of major wine auctions in Hong Kong which sold 100% of lots, mostly to bidders from throughout China. Along with Hong Kong’s growing status as a major wine hub — rivaling the longtime wine center of Asia, Japan — and budding mainland China wine production and consumption, the city is fast becoming a critical stop for wineries around the world to showcase their goods. In November, the Island Shangri-La in Hong Kong will present wines from the 11 members of Primum Familiae Vini, an elite association of wine producing families.

As a PFV press release points out, following Hong Kong the association will take the traveling exhibition to the other two major East Asian wine markets, Tokyo and Shanghai:

At gala dinners, a member of each family will present the family estate and one of its flagship wines that are hard to acquire in the marketplace, paired with specially designed menus. In each city, the gala dinners will be moderated by longtime PFV friend Serena Sutcliffe M.W. head of Sotheby’s Wine Department.

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Shanghai Developer Plans Luxury Home Furnishing Store “With A Twist”

Ausen Real Estate Development Set To Invest US$22 Million In Luxury Home Furnishing Retail Complex, Due To Open Next Year

Ausen World will bring a Western-style furniture shopping experience to Shanghai

Ausen World will bring a Western-style furniture shopping experience to Shanghai

While announcements of new large-scale real estate projects in China are nothing new, nor are they particularly exciting on the whole, Ausen Real Estate Development Co.’s recently-announced plans to open a massive home furnishing retail complex near Shanghai next year stand out. Set to be located in Xinbang, in Shanghai’s Songjiang District (less than an hour’s drive southwest of downtown), the austerely named Ausen World Brand Home Furnishings Center will include features not often seen at furniture stores, including a hotel and restaurant for shoppers who prefer to make a weekend out of their shopping trips. Although slapping a hotel onto a massive furniture store isn’t exactly unheard of, it most certainly is unusual.

According to company spokespeople, Ausen World‘s main focus will be on American and European furniture, popular but often poorly understood by Shanghai-area residents. The center will also include Premium home furnishing areas designed to emulate “DIY” stores like the Home Depot. From Furniture Today:

Another unusual feature for a Chinese retail center will be the presence of on-site interior designers, who can help consumers with home design and product choices.

In a statement, Ausen said it intends to be a door to the Chinese market for Western brands. It will offer help with operating in the country, including support of import entry, logistics and storage.

Zhang said he believes the center will offer a “family feel” that is missing from most Chinese retail spaces, with a rewarding consumer experience for shoppers and their children. An Australian company will design the “eco-garden” look of the complex, including outdoor leisure areas.

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Bombardier Awarded Contract For 80 “Super High Speed” Trains In China

Implications For Second- And Third-Tier Cities, Consumers Immense As High Speed Rail Set To Increase Connectivity

Bombardier's ZEFIRO technology features maximum operating speeds of 380 kph (Image courtesy Bombardier)

Bombardier's ZEFIRO technology features maximum operating speeds of 380 kph (Image courtesy Bombardier)

China’s already extensive, but in some places aging, rail system has benefitted greatly from the government’s massive stimulus spending over the last twelve months. Earlier this year, the New York Times noted that the Chinese stimulus plan — which targeted, among other infrastructure projects, highways and railroads — could likely be a key part of the development of China’s interior cities, many of which have yet to reap the same benefits of the country’s economic growth as their much larger, east-coast counterparts like Shanghai:

The [Chinese] stimulus plan, one of the world’s largest, promises to carry the modernity of China’s coasts deep into the hinterlands, buying the kind of great leap forward it took the United States decades — and a world war — to build, and priming China for a new level of global competition.

China will spend $88 billion constructing intercity rail lines, the highest priority in the plan. It spent $44 billion last year and just $12 billion as recently as 2004, said John Scales, the transport coordinator for China at the World Bank.

As 2009 nears its end, China’s investment in rail infrastructure has not slowed, and in fact remains relatively sustained, due to the size both of the stimulus package and the country itself. Recently, Bombardier Sifang — Bombardier’s Chinese joint venture — nabbed an enviable contract to sell 80 “super high speed” trains to China, a contract worth an estimated US$4 billion (27.4 billion yuan). From China Daily:

CSR Bombardier Sifang (Qingdao) Transportation Ltd, a joint venture of Canadian train maker Bombardier and CSR Sifang Locomotive and Rolling Stock Ltd, signed a 27.4 billion yuan contract with the Shanghai Railway Bureau, under which the company will build 80 high-speed trains.

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Japan’s Mitsuoka Motor Co. To Enter Chinese Market

Japanese Luxury Automaker Plans To Open Beijing Showroom By Q1 2010

The Mitsuoka Orochi will retail for around 800,000 RMB (US $117,177) in China when it arrives next year

The Mitsuoka Orochi will retail for around 800,000 RMB (US $117,177) in China when it arrives next year

The growing Chinese luxury market is a prime target for many Asian companies that have found demand in their home countries — mainly South Korea and Japan — either growing at a snail’s pace or simply remaining stagnant. As formerly luxury-mad consumers in traditional markets like Japan cut back on their spending, high-end Japanese companies have started to look abroad for more opportunities, with China remaining the natural choice as a result of its proximity and massive population.

Recently, Japan’s Mitsuoka Motor Co., one of the country’s major luxury automakers, announced their plans to enter the Chinese market next year, starting with a showroom in Beijing that is slated to open in April. To lead their China efforts, the company will display their Orochi model at next year’s Beijing Auto Show and follow up their Beijing strategy with new dealerships in other top-tier cities:

The Orochi will spearhead Mitsuoka’s debut into China. The company plans to display the car at next year’s Beijing Auto Show, and to open dealerships in Beijing, Shanghai and Guangzhou.

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Luxury China Travel Agent Unveils Shanghai Expo Packages

Mandarin Journeys’ 2010 World Expo Package To Target High-End Foreign Travelers During Shanghai’s “Coming Out Party”

The Shanghai World Expo is expected to attract upwards of 70 million visitors

The Shanghai World Expo is expected to attract upwards of 70 million visitors

Mandarin Journeys, a “Western-run, China based luxury tour operator,” has announced an innovative tour package for visitors to Shanghai’s 2010 World Expo, set to take place from May 1 to October 31 of next year. According to a press release, the luxury tours will be designed in association with some of the leading hotels of Shanghai:

Working with such exclusive properties as Langham, Hyatt, Portman Ritz-Carlton, PuLi and JW Marriott, Mandarin Journeys presents a comprehensive selection of Expo tour packages targeted at a worldwide discerning client base.

Based in China and operated by former tour managers and long-term Western expatriates the company caters to independent travelers from Europe, the United States and Australia. Our destinations include China & Tibet, Japan, Central Asia, Vietnam, Laos, Cambodia and Thailand.

 

World Gold Council Planning Huge Sales Push In Rural China

Council Hoping Government Stimulus Measures Will Spur Consumption In Notoriously Frugal Rural Areas

China is one of the world's top gold markets, owing to its growing middle-class consumption and reliance on gold as a traditional hedge

China is one of the world's top gold markets, owing to its growing middle-class consumption and reliance on gold as a traditional hedge

Shanghai Daily reports today that the World Gold Council has started a major sales drive in rural China, banking on indications that the country’s second- and third-tier cities have more sales potential than their first-tier counterparts in terms of gold consumption. This sales push follows similar drives by antiques, visual artsshopping center and luxury car companies to attract customers in China’s interior — where any semblance of “luxury fatigue” has yet to sink in and the middle class is seeing gradual growth.

As one of China’s traditional hedges, the World Gold Council is banking on gold’s allure to buyers in remote areas both for its value as well as its cultural resonance.

“Rural areas showed better-than-expected demand for gold in the first half in China,” said Gerry Chen, business development manager China of World Gold Council.

China is the only country in the world where gold jewelry demand has risen in the aftermath of the world financial crisis, the council said. Sales in China’s mainland rose 9 percent in the first half, while global demand contracted 8 percent.

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China Now World’s Fastest-Growing Diamond Market

Country Should Overtake Japan As Second Largest Diamond Market By Sales Volume Within The Year

Diamonds are a "must have" for China's growing luxury consumer class

Diamonds are a "must have" for China's growing luxury consumer class

Falling demand for luxury products of all shades has vaulted China to the top of many lists this year, as demand in developed markets has fallen for everything from luxury cars to five-star hotels. With China’s massive population and growing middle class, even gradual growth in demand can mean a great deal for luxury brands, so diamond producers can continue to be optimistic about the potential for their products in China — soon to be the world’s second largest diamond market by sales, if the projections of Freddy Hanard, chief executive officer of the Antwerp World Diamond Centre, are correct.

As the Financial Times writes today, Hanard predicts that diamond sales in China should continue the double-digit growth they saw in the first half of the year to continue throughout the second, and says that sales could possibly double in 2010. As the thirst for luxury products continues to spread in China’s second- and third-tier cities, and wealthier Chinese maintain their desire to diversify luxury and high-value holdings — something that we have seen in recent years as they’ve increasingly purchased luxury cars, gold, rare watches and jewelry, fine wine, contemporary art from China and elsewhere, and real estate — diamonds will probably remain strongly in demand according to all indications.

“China is the world’s fastest growing diamond market. And it can go very fast. It is still discovering diamonds,” said Mr Hanard.

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Shanghai’s Zhabei District Gets Its First Five-Star Hotel

Lexington Plaza Hotel Opens 28 Story, 288 Room Hotel In One Of City’s Up-And-Coming Areas

Zhabei's first five-star hotel could attract new business to the district or draw tourists as the area transforms over time

Zhabei's first five-star hotel could attract new business to the district or draw tourists as the area transforms over time

While hotel openings are not exactly uncommon occurences in a metropolis like Shanghai, the opening of Zhabei District’s first five-star hotel is somewhat noteworthy because of its location and novelty. Zhabei, an area known more as the location of the Shanghai Multimedia Valley tech zone and a popular area for foreign companies looking to set up shop in the area than a must-see for travelers or expats, is gradually developing into a more interesting part of town. With new luxury hotels under construction and more restaurants, bars, and attractions sure to follow, the new five-star Lexington Plaza might just be a taste of what’s to come rather than a strange outlier among a wider industrial landscape.

According to the company’s press release, the Zhabei location follows two existing properties owned by the company, in Shenyang and Zhuai, and the brand has plans to open several more properties under the Lexington Collection flag before year’s end:

According to Roger Bloss, CEO and President of Vantage Hospitality, Lexington’s parent company, the Shanghai property is a testament to the success of Lexington’s Freestyle Brand Affiliation in Asia. “Hotel owners worldwide are making smart decisions and choosing an international affiliation, like The Lexington Collection, that provides them with the freedom to do business as they see fit for their customers while enjoying Vantage’s comprehensive resources.”