Chinese shopping centre developer goes on the attack against e-commerce sites in full-page advert in international paper
The fierce rivalry between China’s high street malls and its fast-growing online retailers spilled onto the world stage after a mainland shopping centre developer took out a full-page advertisement in the International New York Times to urge consumers to “say no to online shopping”.
As China, the world’s second-largest consumer market, feels the chill of an economic slowdown, its traditional bricks-and-mortar retailers are increasingly anxious to keep their declining market share. Many see the fast-growing online retail platforms as the source of their problems.
“Say No to online shopping,” was the main headline of the advertisement campaign by China Properties Group published on December 26 and 27 on page five of the newspaper.
It claims to “represent commercial streets and physical malls worldwide in fighting against online shopping”.
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While it is becoming increasingly common for Chinese companies to run full-page advertisement campaigns in major foreign media, it is thought to be the first time one sector of a business has used them to attack another.
The Hong Kong-listed real estate developer, with commercial projects on the mainland, said two of its shopping mall projects, Concord City in Shanghai’s Nanjing Road and the World Trade Plaza in Chongqing, “will represent commercial streets and physical malls worldwide in fighting against online shopping”.
In the past, shopping mall owners in big mainland cities could easily achieve 10 to 20 per cent profit growth each year even with their eyes shut. However, it has been a big challenge for them to see a five to eight per cent rise today
The company criticised online platforms, without directly naming any, saying they lacked a human touch, broke down people-to-people relations and sold counterfeits. It promised to provide 300 rental-free stores to international brands or popular online retailers which want to expand business offline.
A source close to the company said the developer hoped to raise the projects’ profile and catch people’s attention by publishing advertisements on “a media platform with international influence”. “They are expecting the advertisement to help them find international tenants in future,” he said.
Statistics from the Ministry of Commerce said China’s online sales this year are expected to hit 4 trillion yuan (HK$4.7 trillion), or 13 per cent of the country’s total retail sales.
The number of Chinese online shoppers has nearly tripled to 410 million since 2010 as more and more people use sites such as Alibaba, JD.com and foreign sellers including Amazon and eBay.
High street stores have been hit by factors including slowing economic growth and rising operating costs.
According to industry estimates, 121 department stores, shopping centres and supermarkets were closed down during the first half of this year in China.
One example is Wanda Department Store, the retailing arm of the multi-industry conglomerate Dalian Wanda Group. The group’s chairman Wang Jianlin said they plan to shut down half of their 90-plus stores across the country while establishing the company’s own e-commerce platform.
Fair Fan, China retail services director with global commercial real estate consultant CBRE, said: “In the past, shopping mall owners in big mainland cities could easily achieve 10 to 20 per cent profit growth each year even with their eyes shut. However, it has been a big challenge for them to see a five to eight per cent rise today, not to mention those new malls struggling to find tenants.”
While some traditional retailers have quit the industry, more shopping centres are mulling on how to retain shoppers.
“They invest more to enlarge dining areas, host high-end art exhibitions and add kid’s playgrounds to encourage people to stay there longer. Some of them did a good job,” said Fan.
“As Chinese consumers are paying more attention to ‘experience’ rather than cheap prices, we believe bricks-and-mortar retailers will also have their growth space.”
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China Properties Group, which was listed in Hong Kong in 2007, is constructing several projects in Shanghai and Chongqing, but is finding the going tough. It reported revenue of HK$43 million for the six months to June, compared to HK$253 million a year ago.
“E-commerce retailing is slowly taking over from traditional bricks-and-mortar malls in major cities in China,” said Wang Shih-chang, chairman of China Properties, in the company’s interim report.
“To retain shoppers’ interest, major retailers have to think out-of-the-box to woo consumers back.”
