The city of pandas and spicy hot leads in luxury consumption: here’s why
The history of Chengdu, the capital of the Sichuan Province, dates back to the birth of Chinese culture. Today this dynamic city represents the new frontier of China; it’s situated in a dynamic production cluster and is the gateway of China’s belt and road initiative that seeks to expand infrastructure across Eurasia.
Chengdu is not one of the richest or most populous cities in China. With 10.6 million people, it is only the sixth largest city by population and its GDP of 1.39 trillion RMB comes in eighth. Yet it is the third largest luxury market in China, just behind Shanghai and Beijing.
A pedestrian stroll through Chengdu’s city center will showcase some of the best luxury shopping malls in all of China. Gucci, Bulgari, Prada and Bally and many more high-end international brands rule the district. Stores like the Sino Ocean Taikoo Li – 成都 远洋 太古 里 – or the Chengdu IFS – with a confounding life-size panda statue scaling its façade – have had double digit increases in revenue just a few years after their inauguration. Luxury brands choose Chengdu as their third location, after Beijing and Shanghai.
Why is Chengdu so receptive to luxury brands and high-end shopping malls? It’s in large part due to the culture of the city.
Beauty as a philosophy of life
This “obsession” with luxury is partly the result of the same culture of this region. Since ancient times Sichuan has been known by the epithet of 天府之国, the land of abundance. This region has always been one of the historical bases of production, even in the imperial age. Rich lands, a temperate climate, good food and breathtaking scenery have in turn generated a culture dedicated to art, the pursuit of beauty, and the good life.
The features can still be found in the everyday lives of Chengdu’s urban inhabitants, in part through high-end luxury purchases. Luxury goods are almost necessary for those who live in Chengdu. The second-hand trade of luxury goods is a flourishing market thanks to the prevailing consumption habits of its residents.
A recent survey showed that over 80% of local consumers buy luxury goods for their own use rather than for presents. Furthermore, most of the luxury products sold in Chengdu are bought by locals rather than tourists, as is the case with other commercial centers.
Chengdu is a natural crossroads
The city is located exactly in the center of China. This is why many trains bound for Europe use Sichuan as a terminal hub. Chengdu is also an important tourist center. Many wealthy residents in the surrounding provinces such as Yunnan far prefer to travel to Chengdu for their purchases, rather than flying to Beijing, Shanghai or Guangzhou.
This increase in revenue from has pushed many luxury brands, already operating in the tourism sector, to open their own businesses. At the end of 2013, Armani chose Chengdu to build its first residential project in China, a 65-story building called ” Art Residence “.
The markets of large coastal cities such as Beijing or Shanghai are now saturated. Chengdu straddles categorization as a first or second tier city, making it the perfect testing ground for discovering new markets. The purchasing power of its inhabitants has significantly increased in recent years, making Chengdu the most dynamic emerging Chinese market.
Thanks to the combination of local consumers and tourists from lower-tier cities, Chengdu offers brands the opportunity to test their products and marketing strategies with a different audience. Chanel and Victoria’s Secret have already begun such initiatives. Specifically, the American lingerie brand has announced that its fifth flagship store in the world will be built on 2,300 square meters, inside a luxurious building, right in Chengdu.