Global brands explore China's new first-tier cities for growth
Updated 22:03, 17-Jun-2022
Xu Xinchen

Retail sales in China went down in the first five months of this year, mostly due to COVID-19 restrictions. But international brands are exploring new ways to benefit from the country's vast consumer base. 

In one of southwest Chengdu’s most crowded commercial centers, Sino-Ocean Taikoo Li felt the need for a total facelift in 2022 — the first big change since it came to the city seven years ago. Over 30 stores and restaurants were opened or renovated in the first half of this year — many new to the city and even to the whole country.

"I've noticed that Chengdu is attracting many famous brands. I believe in the consumer potential of this city," said one consumer. 

China now has 15 new first-tier cities in addition to the country's original big four of Beijing, Shanghai, Guangzhou, and Shenzhen. Chengdu ranks first among the new additions because of its commercial environment, population, and future potential.

All these features have helped attract global brands to expand in China's southwest at a time when COVID-19 still affects the country’s east — Chengdu is now a hot destination for brands only after Beijing and Shanghai.

"We see a big resilience of the Chengdu's retail market. There are many key factors to support the growth of Chengdu retail. Chengdu is the third city with prime retail stock only which means the city can provide retail brands and operators with various kinds of retail spaces. Secondly, from the customer side, we can see people here are very open. They are chasing the new style in fashion and would like to try some new food from other countries," said Jacky Zhu, head of Retail Research of JLL China.

Loyal consumers generate solid consumption demand. And for brands, that's what they need.


"For us, in a city like Chengdu, a new first-tier city, it is all about offering an experience. Especially after COVID, it is not only about purchase behaviors. People now love to go out, love to experience, and love to live more exciting lives. I think with the population the size of these cities, there is a big base for us to grow," said Laurence Ma, the VP of L’Oréal China who is also in charge of the company’s Luxe Division

In today's connected world, over 70 percent  of China's 1.4 billion people are on the internet. And according to Accenture, two thirds of China's purchasing potential lives in lower-tier cities. There are many ways for brands to get through COVID barriers and reach China's vast consumer base.

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