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Great Wall of Shopping


SHANGHAI – “Adore the world. Be after it. Be in it.”

This boardwalk advertisement greets at least half a million passers-by every day on Nanjing Dong Lu, Shanghai’s premier commercial thoroughfare, where almost 40 years ago hordes of vigilant Red Guards waved Mao Zedong’s Little Red Book. It is promoting – what else – a new shopping mall.

And Shanghainese are indeed more than adoring, “after” and “in” this (shopping) world. Still growing at a dizzying 12% a year – to the cries of “unsustainable” by rows of economists in bad suits – conspicuous consumption in this greatest of Asian cities peppered with 40 mega-malls and counting, is the rule. So long live the consumer revolution. In the first Ferrari showroom, opened last summer, a “pedestrian” Maranello costs a mere US$475,000. At Giorgio Armani’s flagship Chinese store, facing the Bund, a Shanghainese-Milanese fusion explodes in silky minimalism. Even the jewelry design is sinified. Communist Party cadres aren’t hip to Armani yet, but anyway the Milan fashion icon has already cornered the luxury market. A man’s jacket costs only 10,000 yuan ($1,220) – more than the annual disposable income of a Shanghainese mid-level executive.

Smart Shanghainese chic, MTV-style, shopping till they drop in the mall row of Huaihai Road, week in and out, look as though they could be in Los Angeles, London, Bangkok or Sao Paulo. And if you’re in no mood to shop, the party forces you to. State holidays are longer – some a week long, like the upcoming Chinese New Year in early February, encouraging internal tourism. The six-day week enforced by state-owned enterprises (SOEs) is no longer the norm. Power cuts, according to Shanghainese, always happen when the government transfers electricity from factories to malls. There’s an ongoing credit-card boom. And everybody still saves as much as 40% of his income. For the right product and the right marketing, the (polluted) Shanghainese sky is the limit. Talk about the latest, supreme object of desire, the LG G920 cell phone, retailing at 4,999 yuan ($609), is it.

But in a country where in 2003 (the latest data available) the average per capita disposable income in urban areas was 8,472 yuan ($1,033) a year, while for farmers it was only 2,622 yuan ($319) a year, who’s really climbing the Great Wall of shopping?

Middle classes unite
No less than 46.8% of Chinese now believe they belong to the middle class, according to a recent poll by the Chinese Academy of Social Sciences (CAAS). This may be an illusion of success, but it is nonetheless relentlessly reinforced by the advertising industry in order to fuel mass consumption. Chinese TV is a notorious deluge of ads, occasionally interrupted by soap operas, news and sports. For Shanghainese serial shoppers, desire is indeed reality.

According to Li Chunling, a researcher at the CAAS/Sociology Institute, the Chinese middle class only materialized in the mid-1990s: she says the concept is a media-fabricated myth. Without a precise definition, many Chinese would arguably have doubts about placing themselves in this category. But certainly not the Shanghainese.

The CAAS research identified, as far as profession is concerned, five categories considered to be part of the middle class: Party cadres, business managers, chief executive officers in the private sector, qualified technicians and office staff. In terms of revenue, researchers selected people with a higher revenue than the average local monthly salary. This varies a lot from region to region. In Beijing, the average monthly salary is 10,000 yuan ($1,220), but it’s much lower in provincial cities. In terms of lifestyle and consumer preferences, researchers identified four groups of products, and attributed points to their ownership – from the indispensables (color TV, refrigerator and washing machine) to luxuries (computers, private cars).

Many in the Chinese press applied the Chinese Academy of Social Sciences criteria to the 2000 Chinese census and came up with only 2.8% of the Chinese population as middle class. So they started labeling serial shoppers as part of the “elite culture”. In big cities like Shanghai, Beijing, Guangzhou and Shenzhen, too many malls, too many cars, too many insurance policies and too many holiday packages to Europe convey the impression of a middle-class bubble. That’s not necessarily a bad thing, according to Li Chunling of the Academy of Social Sciences: they may be few in relative numbers, but as they make their mark in big cities like Shanghai and are relentlessly glorified by the media, “the members of the middle class considerably influence the rest of the population with their lifestyle.”

The Chinese Business Executive Survey by Beijing-based CTR Market Research, the leading market research company in China in four big cities – Beijing, Shanghai, Guangzhou and Shenzhen – only reinforced the conclusions by the CAAS research. It polled 340,000 senior executives, owners of enterprises and heads of key departments – 41,7% of them, as expected, are based in Shanghai, 32.2% work in state-owned enterprises (SOEs) and only 12.5% in foreign-owned companies. They work 10 hours a day on average. Apart from Mandarin, English is their primary language. Significantly, only 5.67% have an annual income of more than 200,000 yuan ($24,390), and only 2.14% an average annual income of more than 500,000 yuan ($60,975). The average annual income is 82,000 yuan ($10,000), while the average annual household income is 130,000 yuan ($15,853). Hardly enough to fill an Armani shopping bag.

The results also confirm the CAAS research in the sense that half of the executives say that advertisements “enhance their confidence” and influence their choice of brands. And once they find their favorite brand – which they want to reflect their social status – around 77% never change their minds, and they recommend the brand to others.

Xintiandi, the model unit
Popular housing, communist-style, was usually referred to as “model units”. Now welcome to the model unit for superpower China as a mega-shopping mall – but always under tight political grip, as the Little Helmsman Deng Xiaoping himself formulated after his visit to model Singapore in the late 1970s. Welcome to Xintiandi.

Xintiandi, which literally means “new earth and sky”, is two square blocks of shikumen – “stone gate” houses built in the 19th century along long tang, “narrow alleys”. From the 1850s to the 1940s, 60% of Shanghai was shikumen. In the shikumen, European townhouse architectural styles are in fusion with Yangtze River delta architecture. This translates into splendid communal living – common walls, courtyards, attached terraced houses. In 21st century China, shikumen had to become – what else – a shopping arcade.

The story of Xintiandi tells everything one needs to know about the ideal development model for all of China. Its main character is 56-year-old Vincent Lo, chairman of the Hong Kong-based Shui On Group. In Shanghai, as well as in Beijing, he is rightfully known as “the king of guanxi”. Without guanxi (connections) nothing gets done in China, as many a foreign enterprise had to find out at its own expense.

Lo had his eyes set on Shanghai in 1984, at a time when Pudong, on the other side of the Huangpu River, was nothing but rice fields. In an extraordinary book edited by the Shanghai People’s Fine Arts Publishing House, amateur photographer Xu Xixian vividly documents the changes in the city. In a 1983 photo of Suzhou Creek, we only see a steel bridge, the Soviet Embassy building and a few barges. In 2004, behind the bridge, have mushroomed, as if by magic, the dozens of futuristic towers of glass and steel of futuristic Pudong.

When Lo got to Shanghai in the mid-1980s, he built a hotel for the local Communist Youth League. The hotel opened at the time of the Tiananmen Square student massacre in June 1989. The Youth League didn’t have the money to repay loans. Lo stuck with them – and the gamble paid off, as one of those with long memories was Han Zheng, the Youth League secretary who is now the mayor of Shanghai.

It was only through impeccable guanxi – Zheng, the current mayor, plus Xu Kuangdi, the former mayor, with whom he also did business – that Lo finally got the right to develop Xintiandi: a fabulous 50-hectare sprawl of prime land, including a two-hectare complex of chic restaurants, bars and boutiques. The whole project cost $170 million. Xintiandi even engulfed – also metaphorically – memorable 76 Xingya Road, the “Memorial Hall for the Site of the First National Congress of the Communist Party of China”, held in 1921 by Mao Zedong and his 12 colleagues. As market Leninism prevails, Mao memorabilia remains dutifully on sale at the memorial hall shop.

Ideologically, Xintiandi is also crucial because it is a living embodiment of recently retired former first comrade and president Jiang Zemin’s doctrine of the Three Represents. The Three Represents stated that the party could not only represent workers and peasants anymore – its traditional Marxist constituencies – but had also to represent “the interests of the vast majority of the population”, of “advanced productive forces and “advanced cultural forces”. Jiang meant, in other words, that to remain strong the party had to become more bourgeois. More middle class. More “Xintiandized”. According to Jiang, “the great door to Chinese Communist Party membership should be opened to all advanced elements of the Chinese people. If we do this we can solidify our party and we will face no dangers.” (The Three Represents, now enshrined in the Chinese constitution, says the Communist Party shall include capitalists and entrepreneurs within the its ranks, still a source of deep division because some say it widens the gap between rich and poor.)

Xintiandi is not only a radically designed mall cum entertainment center appealing to the Three Represents constituency – with such places as the Tou Ming Si Kao (TMSK) restaurant, creating what could be called the post-modern Tang Dynasty style. As a symbol of the new swinging Shanghai, Xintiandi is a fabulous marketing tool for the Shui On Group. Beijing party elders were delighted, as well as the Shanghai government, which promptly offered Lo the keys to develop the rest of the 50 hectares into luxury townhouses, office buildings and hotels. Shui On made a killing selling loads of $3,000-per-square-meter apartments.

The art deco Corporate Avenue office building is defined in its brochure as “in step with lifestyle fashion” – a killer mantra bound to seduce those thousands of executives in both the Chinese Academy of Social Sciences and the Crowding the Rim (CTR) Asia-Pacific Research Center. It features, among other tenants, a fabulous spa, the BMW Lifestyle boutique and the Citing Wealth Management Center. Right beside it, there’s 88 Xintiandi, which started its life as an executive residence, turned out to be too expensive for the average business traveler and is now rebranded as a still prohibitively expensive hotel (one bedroom suite for $328 a night, plus 15% tax).

Xintiandi even spun off its own Xintiandi Saint Emillion 2000, “hand selected”, as the corporate literature insists, by none other than Bordeaux luminary Christian Moueix, the owner, among others, of the Chateau Petrus vineyard. Inevitably, such a success story like Xintiandi had to be cloned. The next one, Xihu Tiandi, will be in Hangzhou, southwest of Shanghai.

Lo’s and Shui On’s corporate coup de grace was to predict that China not only would be involved in a giant development boom in the east, also would have to invest massively inland. Ten years ago – and five years before Beijing launched its “Go West” campaign – Lo bought his first cement plant in ultra-polluted Chongqing, in Sichuan province. Shui On is now one of the top three cement producers in China. It did not hurt Lo to invest in faraway Chongqing, just as an old friend from Shanghai became the city’s vice mayor and another friend, a former minister, became Chongqing’s party secretary. This auspicious confluence of interests has generated another- what else – Xintiandi for Chongqing, bigger than the original in Shanghai. And the next Xintiandi-bound city will be Wuhan. Deng Xiaoping’s vision was to build a thousand Singapores in China. He would have been overjoyed with an additional thousand Xintiandis.

The wrecker’s ball
Xintiandi may be unique because redevelopment in this case is connected to historical protection. Almost 3,000 families living in this area of the former French concession had to be relocated. They seem to have been well compensated. But in the wrecker’s ball that is 21st-century Shanghai, that’s not always the case. Anonymous Shanghainese confirm that the confluence between local government and wealthy real estate developers, local or from the Chinese diaspora, usually holds no respect for property rights, no proper compensation for them and no negotiation or due process. Residents usually learn they are going to be thrown out by officials from the local council. They are told they cannot negotiate, are offered cash or a relocation somewhere to a drab mini-condo overlooking a viaduct, and given two or three months to vacate their premises. Families living in three-story houses may be offered something like $3,000, the price of one square meter in a new tower block. It’s take it or leave it.

The case of Zheng Enchong still resonates in Shanghai. He is a local lawyer who sued the city on behalf of 500 families that have been evicted. He lost, and his license was revoked. Then he was asked to be an adviser in another suit on behalf of more than 2,000 families. A few days after the case began, he was arrested in his own apartment by the Public Security Bureau, accused of fabricating tales of social unrest to foreign non-governmental organizations, tried in a closed court and sentenced to three years in jail.

On the other side of Xintiandi, across the Huangpu River, market Leninism at work can be observed in its full glory at the Shanghai Stock Exchange – located in the gleaming Pudong financial district, where 1,600 trading terminals surround a central trading floor. It’s virtually empty. The silence is almost sepulchral. No wonder. When hundreds of state-owned enterprises were privatized, Beijing in each case rarely sold more than a third of the shares. The Chinese government remains the main shareholder – and the business community is still its lackey.

Shanghainese businessmen insist – or rather pray to Confucius – that the city’s economy will not follow the lead of its slumbering stock market. They hope that the bubble of those $3,000-per-square-meter property prices and of the frenetic Great Wall of shopping will deflate, inevitably, but gradually. And they bet on non-stop prosperity, of course, to solve all of China’s problems – such as all those mountain ranges of bad debts.

As for Shanghai the city, the Shanghai Landscape Administration Bureau insists the authorities are now devoting “more energy to the promotion of a new round of landscape construction in a three-year action program”, and working hard to “form forestation networks composed of rings, corridors, gardens as well as forest”. As a result, they say, this “will make the sky bluer, the ground greener, the water cleaner and residences more comfortable”. Oh, and the malls fuller, of course.

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