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Financial Times (London, England)
August 24, 2005 Wednesday
Asia Edition 1
SECTION: ASIA-PACIFIC; Pg. 3
LENGTH: 765 words
HEADLINE: China's interior cities set to benefit as capitalism sweeps inland: With costs rising in the prosperous coastal areas of the south and east, companies are hoping to find new markets in the country's second-tier cities, writes Geoff Dyer
BYLINE: By GEOFF DYER
BODY:
Wuhan, one of the teeming industrial cities that straddles the Yangtze river, has been witnessto many of China's historical turning points of the past century.
Like Shanghai at the start of the 20th century, the city's port was taken over by foreign governments: the opium flowed up the river and the tea was shipped out from the French, German, Russian, British and Japanese concessions.
The Nationalist government briefly decamped to Wuhan when the Japanese took Nanjing in 1937. And it was there in 1966 that Mao Zedong conducted his most famous swim in the Yangtze, one of the events that signalled the beginning of the Cultural Revolution.
Now Wuhan is to become the site of one of the symbols of the new era of capitalist consumption spreading across inland China - it is getting its own version of Xintiandi, the smart restaurant and shopping complex in Shanghai.
Situated in two blocks of restored lane houses that recreate the city's architecture at the beginning of the 20th century, Xintiandi is the most popular tourist attraction in Shanghai. For the city's promoters, Xintiandi shows the city can combine commercial dynamism and a sense of style.
The huge popularity of Xintiandi has meant its creators - the Hong Kong property group Shui On Land and US architect Ben Wood - have been inundated with offers from other Chinese cities to build a version.
By choosing Wuhan, the capital of central Hubei province, Shui On Land is taking a big bet on the way China is going to develop over the next decade.
The prosperity that has been generated in the past 25 years has been concentrated on the coastal areas in the south and east. The big challenge for companies operating in China - whether they sell cars, shampoo or luxury goods - is to move inland to the second-tier cities in the centre, a region that hosts hundreds of millions of untapped consumers.
But the challenges are huge. Distribution away from the coast can be cumbersome and expensive, while legal disputes are more common. Moreover, the extent of the purchasing power in many second-tier cities is unclear.
Xintiandi in Shanghai is an upmarket concept and the prices, by Chinese standards, are not cheap - the seared tuna steak at T8, one of the more chic restaurants, costs Dollars 24 (Euros 20, Pounds 13) a time.
The fate of a similar venture in Wuhan will be a good litmus test for the real size of the middle class in central Chinese cities.
"The middle market is not here yet in Wuhan, but we believe it is happening and quickly," says Vincent Lo, chairman of Shui On Land, during a visit to the company's Wuhan site. If the city can develop the trappings of modern consumer culture, he says, more educated people will stay rather than move to the coastal cities.
The group also has a large project in Chongqing, another huge industrial hub farther up the Yangtze.
Wuhan's geographic location makes it a focal point for the central regions. It is one of the main ports on the Yangtze and is also on the main north-south railway line linking Beijing with the boom areas in the Pearl River delta, near Hong Kong. As labour costs rise near the coast, foreign investors are looking at Wuhan, with a population of about 4m.
Shui On, which spent Rmb3.3bn (Dollars 408m, Euros 333m, Pounds 226m) to buy the plot of land in the old Japanese concession of Wuhan, is not the only company betting that the city is about to be swept up in commercialism.
Wuhan has seen a string of record-breaking deals involving Hong Kong-based developers. In February, Shimao Group won an auction for a piece of riverside land at the price of Rmb3.15bn, and the likely investment in developing the site into a tourism and commercial area could be Rmb8bn.
Meanwhile, Cheung Kong and Hutchison Whampoa, the flagship companies of Hong Kong billionaire Li Ka-shing, bought two areas in the city that will be the site for a Dollars 2.4bn commercial and residential development. "I keep telling my investors, there is still a short-term opening to build up a land bank in the second-tier cities before competition gets too hot," says Mr Lo.
The challenge is to develop an area that captures the imagination of Wuhan residents but is not too far beyond their means. During a tour of the city, Mr Wood was planning ways to incorporate local architecture that mixes Chinese elements with European buildings similar to those on Shanghai's Bund.
"If you can elevate something that people normally take for granted, they feel more fashionable and the idea will succeed," he says. "The risk we have to avoid, of course, is that we make it into a sort of Disneyland."
LOAD-DATE: August 23, 2005
August 24, 2005 Wednesday
Asia Edition 1
SECTION: ASIA-PACIFIC; Pg. 3
LENGTH: 765 words
HEADLINE: China's interior cities set to benefit as capitalism sweeps inland: With costs rising in the prosperous coastal areas of the south and east, companies are hoping to find new markets in the country's second-tier cities, writes Geoff Dyer
BYLINE: By GEOFF DYER
BODY:
Wuhan, one of the teeming industrial cities that straddles the Yangtze river, has been witnessto many of China's historical turning points of the past century.
Like Shanghai at the start of the 20th century, the city's port was taken over by foreign governments: the opium flowed up the river and the tea was shipped out from the French, German, Russian, British and Japanese concessions.
The Nationalist government briefly decamped to Wuhan when the Japanese took Nanjing in 1937. And it was there in 1966 that Mao Zedong conducted his most famous swim in the Yangtze, one of the events that signalled the beginning of the Cultural Revolution.
Now Wuhan is to become the site of one of the symbols of the new era of capitalist consumption spreading across inland China - it is getting its own version of Xintiandi, the smart restaurant and shopping complex in Shanghai.
Situated in two blocks of restored lane houses that recreate the city's architecture at the beginning of the 20th century, Xintiandi is the most popular tourist attraction in Shanghai. For the city's promoters, Xintiandi shows the city can combine commercial dynamism and a sense of style.
The huge popularity of Xintiandi has meant its creators - the Hong Kong property group Shui On Land and US architect Ben Wood - have been inundated with offers from other Chinese cities to build a version.
By choosing Wuhan, the capital of central Hubei province, Shui On Land is taking a big bet on the way China is going to develop over the next decade.
The prosperity that has been generated in the past 25 years has been concentrated on the coastal areas in the south and east. The big challenge for companies operating in China - whether they sell cars, shampoo or luxury goods - is to move inland to the second-tier cities in the centre, a region that hosts hundreds of millions of untapped consumers.
But the challenges are huge. Distribution away from the coast can be cumbersome and expensive, while legal disputes are more common. Moreover, the extent of the purchasing power in many second-tier cities is unclear.
Xintiandi in Shanghai is an upmarket concept and the prices, by Chinese standards, are not cheap - the seared tuna steak at T8, one of the more chic restaurants, costs Dollars 24 (Euros 20, Pounds 13) a time.
The fate of a similar venture in Wuhan will be a good litmus test for the real size of the middle class in central Chinese cities.
"The middle market is not here yet in Wuhan, but we believe it is happening and quickly," says Vincent Lo, chairman of Shui On Land, during a visit to the company's Wuhan site. If the city can develop the trappings of modern consumer culture, he says, more educated people will stay rather than move to the coastal cities.
The group also has a large project in Chongqing, another huge industrial hub farther up the Yangtze.
Wuhan's geographic location makes it a focal point for the central regions. It is one of the main ports on the Yangtze and is also on the main north-south railway line linking Beijing with the boom areas in the Pearl River delta, near Hong Kong. As labour costs rise near the coast, foreign investors are looking at Wuhan, with a population of about 4m.
Shui On, which spent Rmb3.3bn (Dollars 408m, Euros 333m, Pounds 226m) to buy the plot of land in the old Japanese concession of Wuhan, is not the only company betting that the city is about to be swept up in commercialism.
Wuhan has seen a string of record-breaking deals involving Hong Kong-based developers. In February, Shimao Group won an auction for a piece of riverside land at the price of Rmb3.15bn, and the likely investment in developing the site into a tourism and commercial area could be Rmb8bn.
Meanwhile, Cheung Kong and Hutchison Whampoa, the flagship companies of Hong Kong billionaire Li Ka-shing, bought two areas in the city that will be the site for a Dollars 2.4bn commercial and residential development. "I keep telling my investors, there is still a short-term opening to build up a land bank in the second-tier cities before competition gets too hot," says Mr Lo.
The challenge is to develop an area that captures the imagination of Wuhan residents but is not too far beyond their means. During a tour of the city, Mr Wood was planning ways to incorporate local architecture that mixes Chinese elements with European buildings similar to those on Shanghai's Bund.
"If you can elevate something that people normally take for granted, they feel more fashionable and the idea will succeed," he says. "The risk we have to avoid, of course, is that we make it into a sort of Disneyland."
LOAD-DATE: August 23, 2005
posted by Eastlaw @ 11:58 PM
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