The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
CHENGDU, China — Wu Yanjin can remember the days before Chengdu had any fashion clout at all. Born and raised in this subtropical city of 14 million people, deep in the mountainous interior of Sichuan province, Wu somehow emerged as one of the first fashion bloggers in China. Back then, the only thing that might have propelled her hometown into the international spotlight was Chengdu's fiery food, the nearby panda sanctuary or a mega earthquake.
But after assuming the pen name Agyness Cirol to chronicle the comings and goings of style-conscious locals on Weibo, a Twitter-like microblogging website, Wu witnessed Chengdu quickly evolve. No longer an outpost where brands and clients jostled for position using pure economic muscle, Chengdu gained a reputation for itself as a city with a unique sense of style, wavering between laid-back cool and a passion for the eclectic. And in doing so, it became one of China’s most lucrative, important fashion markets.
“There used to be nowhere but the Sheraton Hotel on Renmin Zhong Road where you could even see authentic products or brands like Louis Vuitton,” she says, recalling the arrival of the city’s first set of upmarket business hotels in the mid-1990s, which served as an early cluster of international fashion boutiques, although it often felt a little rough around the edges. “At that time, the clients were mostly foreign business travellers who turned up when they needed fancy clothes for dinner parties. But that’s all ancient history now.”
After 2000, a wave of high-end shopping centres like Maison Mode, Renhe Spring and Yanlord Landmark created a solid foundation for the city’s fashion market and, over the past five years, the city’s retail scene has been utterly transformed by colossal projects like the New Century Global Center in Tianfu, a mixed-use retail space which boasts the title of the largest building in the world as measured by floor space.
Scale is a fact of life in Chengdu, a sprawling but ancient city founded 2300 years ago and the capital of Sichuan province. Over 80 million people live in Sichuan, the same number who live in Germany, and the provincial GDP is about $465 billion (RMB 2.854 trillion), making Sichuan’s economy larger than that of countries like Egypt, Denmark, South Africa and Singapore. But Chengdu’s booming economy is now integrated across the region rather than just being dependent on the fortunes of the province in which it sits.
Strategic Gateway City
As a strategically located gateway and logistics hub for frontier markets in Western China and Southeast Asia, Chengdu is much closer to Tibet, India and Burma than it is to Beijing. As such, the city is home to several ethnic minorities like the Yi, Qiang and Nakhi peoples, who have moulded its unique culture, known throughout the rest of China for its Sichuanese opera, piquant cuisine and passionate, easy-going people.
Chengdu's distant location, some 2,000 kilometres west of Shanghai, has meant that local partners and operators are often essential to understand the city's tastes and build effective guanxi. In fashion retail, companies like the Sichuan Lessin Group have become especially important for this reason, ushering brands like Brioni, Ralph Lauren and Gucci into developments that it dominates.
Chengdu businesses also have strong links to Hong Kong, so it is no surprise that developers like Swire Properties broke ground for the massive Daci Temple Project in downtown Chunxi Road, where there are major opportunities for fashion retail, or that Wharf Holdings erected the IFS complex on Hongxing Road for top-tier brands like Chanel, Balenciaga and Burberry.
The city has been on the fashion radar of most Chinese magazines for quite a few years, as they tracked key influencers and street style there. Lane Crawford chose Chengdu last year when it opened its first department store in mainland China after Shanghai and Beijing. There is now a trend for marquee brands like Cartier and Dior to debut their big fashion exhibitions in Chengdu before sending them on a tour of China’s fashion capitals.
Wealth and Whimsy
Data issued in 2013 by China’s wealth tracker, the Hurun Report, reveals that 26,000 US dollar-millionaires reside in Chengdu (earning above RMB 6 million) along with 930 ‘super rich’ (earning above RMB 100 million).
At the luxury end of the market, many brands now have one or two outposts around the city (Burberry has three), while the footprints of affordable brands can be quite impressive. For instance, when executives at H&M headquarters celebrated the opening of the company’s 3,000th global store in 2013, it happened to be their store in Chengdu. But by that time, the retailer already had seven other shops in town, so it went largely unnoticed in Chengdu itself. What is more telling is that, just eighteen month later, the number of H&M shops in Chengdu had doubled.
For much of the past decade, the pace of economic growth in Chengdu has been staggering, with double-digit growth rates that have hovered at around twice as high as China’s national average. But things have slowed in tandem with the general cooling trend across the country.
Nevertheless, according to the Brookings Institute, Chengdu’s urban GDP growth from 2013 to 2014 was 8.1 percent, which is still 1.4 percent higher than the rest of the country. That ranks Chengdu as the 16th best performing city in the world, higher than Jakarta, London and Delhi and far outpacing larger, more saturated Chinese cities like Beijing (ranked 67) or Shanghai (ranked 92).
Although there are concerns over high vacancy rates for some commercial properties in Chengdu, the market is hard to gauge as many retail upgrades are simultaneously taking place. According to a Q1 report by Cushman & Wakefield, over 1.5 million square metres of shopping mall supply will launch in the remainder of 2015, including developments like The Atrium Phase I, Sino-Ocean Land Taikoo Li and The One. In the first two months of 2015, Chengdu’s total retail sales achieved RMB 75.6 billion ($12.4 billion), rising 10.5 percent year-on-year.
If anything, it appears that fashion may benefit more than other retail sectors in the city. According to Oxford Economics, the global forecasting arm of Oxford University that tracks 750 of the world’s largest cities, Chengdu ranks 71st in the world for consumption of clothing but by 2030, in just 15 years time, it will rise to become the 28th largest. With a projected clothing market worth $10.2 billion, consumers in Chengdu are expected be buying more than those in Melbourne, Miami, Mumbai or San Francisco.
Most analysts agree that the relentless march of big-box fashion retailers will continue during this next phase of growth, but according to Wu Yanjin, this doesn’t mean that Chengdu locals see themselves as ‘catching up with the Joneses’ in more mature markets like Hong Kong, Beijing or Shanghai. On the contrary, consumers in Chengdu are confident and adventurous, she says, but in their own laid-back, indie, whimsical way.
In other words, Chengdu’s fashion faithful are very trend-aware, she suggests, but rarely are they slaves to trends, like consumers in some cities. Unusual items from the big brands and niche designers that are hard to find even in China’s fashion capitals are a mark of this newly chic and varied retail environment. Such items are what best cater to the tastes of luxury consumers in Chengdu, especially the younger demographic, says Wu.
Much of this has to do with well-paid employment opportunities in and around the city in the high-tech manufacturing, software, logistics, defence and energy industries. More than half of the world’s Fortune 500 companies have opened offices in Chengdu, thanks in part to the number and reputation of universities nearby. Enviable rates of foreign direct investment have, in turn, reaffirmed the city’s status as the preeminent business and shopping destination for Western China, which has a regional market of 300 million people.
Tourism is big, thanks not only to wildlife conservation sites like the local panda centre but also because of the city’s foresight to protect some of its historic sites and the perception that Chengdu has a better quality of life compared to other Chinese cities. Efforts by the municipality to try to tackle pollution, spend on health care and drive eco-friendly investment haven’t gone unnoticed either. Arguably, the net effect is a more carefree lifestyle than in cities like Shanghai or Guangzhou.
Chengdu’s light-hearted spirit can be seen in the way that much of the market wears and consumes fashion too. Take the multi-brand boutique Dressing For Fun, which was launched by Xiao Ai three years ago. When written in Chinese, the shop name characters are pronounced ‘Shua Shan’ which literally means “playing with clothes” in the local Sichuanese dialect.
Dressing For Fun stocks an interesting mix of rising Chinese designers like Momo Wang and Peiran Gong as well as young international brands including Marques Almeida from London and Ann-Sofie Back from Sweden. Such stores are still relatively rare anywhere on the Chinese mainland, let alone in the country's remote southwest. More revealing perhaps, is the fact that the retailer also stages off-site pop-up vintage designer shops called "People are Strange" with avant-garde Japanese and Belgian designers.
“We have a very mature luxury market here. Before the major brands were introduced to the city, Chengdu people were already used to travelling all around the world to find what they liked or asking someone abroad to buy special branded items for them,” says Dressing For Fun’s owner Xiao Ai.
Yuanyi Jeff Lee, a Shanghai-based stylist who spent his middle school years in Chengdu, is also impressed by Chengdu’s booming fashion scene. “Chengdu people are living life faster than before and more [extravagantly] too,” he says. “They hold a very different view of their personal finances compared to people living in Beijing, Shanghai or Guangzhou. A Chengdu person might spend four times the amount someone in Shanghai would spend from their disposable income.”
One of Lee's preferred local stores is Sihe, which hosts an impressive selection of independent Chinese designers including Masha Ma, Simon Gao and Ran Fan, as well as rising stars like Ricostru. Another retail pioneer on the Chengdu scene is Chen Xiaoyu, the founder of Pavallion Boutique who spends several weeks on the road touring fashion weeks in Europe, China and the US each season to buy her popular edit of some of the most talked-about luxury brands on the market like Proenza Schouler and Alexander Wang.
“We have some very loyal customers who easily spend ten to a hundred thousand RMB (about $1,600 to $16,000) here. They tend to stick to very specific brands though,”says Zhang Min, the manager of Pavallion Boutique, which is situated in Tongzilin, a wealthy residential neighbourhood to the south of the city’s recently refurbished Wuhou District.
“The younger customers may spend less, but they are more open-minded to new brands like the Chinese designers we began introducing recently, like Masha Ma and Qiu Hao. Believe it or not, it is the youngest customers who are actually our biggest sales driver, so I don’t think Chengdu’s fashion market is going anywhere but up.”