[Paleopsych] NYT: China, New Land of Shoppers, Builds Malls on Gigantic Scale

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China, New Land of Shoppers, Builds Malls on Gigantic Scale
http://www.nytimes.com/2005/05/25/business/worldbusiness/25mall.html

    By DAVID BARBOZA

    DONGGUAN, China - After construction workers finish plastering a
    replica of the Arc de Triomphe and buffing the imitation streets of
    Hollywood, Paris and Amsterdam, a giant new shopping theme park here
    will proclaim itself the world's largest shopping mall.

    The South China Mall - a jumble of Disneyland and Las Vegas, a
    shoppers' version of paradise and hell all wrapped in one - will be
    nearly three times the size of the massive Mall of America in
    Minnesota. It is part of yet another astonishing new consequence of
    the quarter-century economic boom here: the great malls of China.

    Not long ago, shopping in China consisted mostly of lining up to
    entreat surly clerks to accept cash in exchange for ugly merchandise
    that did not fit. But now, Chinese have started to embrace America's
    modern "shop till you drop" ethos and are in the midst of a
    buy-at-the-mall frenzy.

    Already, four shopping malls in China are larger than the Mall of
    America. Two, including the South China Mall, are bigger than the West
    Edmonton Mall in Alberta, which just surrendered its status as the
    world's largest to an enormous retail center in Beijing. And by 2010,
    China is expected to be home to at least 7 of the world's 10 largest
    malls.

    Chinese are swarming into malls, which usually have many levels that
    rise up rather than out in the sprawling two-level style typical in
    much of the United States. Chinese consumers arrive by bus and train,
    and growing numbers are driving there. On busy days, one mall in the
    southern city of Guangzhou attracts about 600,000 shoppers.

    For years, the Chinese missed out on the fruits of their labor,
    stitching shoes, purses or dresses that were exported around the
    world. Now, China's growing consumerism means that its people may be a
    step or two closer to buying the billion Cokes, [2]Revlon lipsticks,
    [3]Kodak cameras and the like that foreign companies have long dreamed
    they could sell.

    "Forget the idea that consumers in China don't have enough money to
    spend," said David Hand, a real estate and retailing expert at
    [4]Jones Lang LaSalle in Beijing. "There are people with a lot of
    money here. And that's driving the development of these shopping
    malls."

    For sale are a wide range of consumer favorites - cellphones, DVD
    players, jeans, sofas and closets to assemble yourself. There is food
    from many regions of China and franchises with familiar names - KFC,
    [5]McDonald's and [6]IMAX theaters. Stores without Western pedigree
    sell Gucci and Louis Vuitton goods. While peasants and poor workers
    may only window-shop, they have joined a regular pilgrimage to the
    mall that has set builders and developers afire. The developers are
    spending billions of dollars to create these supersize shopping
    centers in the country's fastest-growing cities - betting that a
    nation of savers is on the verge of also becoming a nation of tireless
    shoppers.

    For the moment, the world's biggest mall is the
    six-million-square-foot Golden Resources Mall, which opened last
    October in northwestern Beijing. It has already sparked envy and
    competitive ambition among the world's big mall builders, who
    outwardly scoff at the Chinese ascent to mall-dom, even as they plot
    their own path to build on such scale in China.

    How big is six million square feet? That mall, which is expected to
    cost $1.3 billion when completed, spans the length of six football
    fields and easily exceeds the floor space of the Pentagon, which at
    3.7 million square feet is the world's largest office building. It is
    a single, colossal five-story building - with rows and rows of shops
    stacked on top of more rows and rows of shops - so large that it is
    hard to navigate among the 1,000 stores and the thousands of shoppers.

    The shopping-mall building spree, like much economic activity in China
    these days, is so aggressive that some economists and officials have
    started to worry that it may be another sign of an overheated economy,
    and that the country's building frenzy may be lurching toward a fall.

    So far, though, there is no end in sight - and no evidence that
    China's long boom is likely to suffer anything more than a modest
    slowdown.

    "These shopping centers are just huge," said Radha Chadha, who runs
    Chadha Strategy Consulting in Hong Kong, which tracks shopping malls
    and the sales of luxury goods in Asia. "China likes to do things big.
    They like to make an impact."

    Retail sales in China have jumped nearly 50 percent in the last four
    years, as measured by the nation's biggest retailers, government data
    says. And with rising incomes, Chinese are spending their money on
    shoes, bags, clothing and even theme-park-style rides.

    "We like this place a lot," said Ruth Tong, 27, an early visitor to
    the South China Mall here in Dongguan with her husband and 5-year-old
    son. "They have a lot of fun things to do. They have shopping and even
    rides. So we like it and yes, we'll come back again."

    The central government recently ordered state-controlled banks to
    tighten lending to huge shopping mall projects. But that has not yet
    tempered the plans of aggressive developers and local government
    officials for transforming vast tracts of land into huge shopping
    centers.

    After all, the demand is certainly growing. Income per person in China
    has reached the equivalent of about $1,100 a year, up 50 percent since
    2000.

    China is still a land of disparity, though it has a growing middle
    class that has swelled to as many as 70 million.

    And as the country rapidly urbanizes and modernizes, open-air food
    markets and old department stores are being replaced by giant
    supermarkets and big-box retailers.

    Ikea and Carrefour, the French supermarket chain, are mobbed with
    customers. And China's increasingly affluent young people are adopting
    the American teenager's habit of hanging out at the mall.

    Big enclosed shopping malls, which came of age in America in the late
    1970's and Europe in the late 80's, are sprouting up all over China.
    According to retail analysts, more than 400 large malls have been
    built in China in the last six years.

    And at a time when the biggest malls under construction in the United
    States measure about a million square feet, developers here are
    creating malls that are six, seven and eight million square feet.

    The current titleholder, the Golden Resources Mall, where 20,000
    employees work, is the creation of Huang Rulun, an entrepreneur who
    made a fortune selling real estate in coastal Fujian Province. Six
    years ago, Mr. Huang acquired a 440-acre tract of land outside Beijing
    to create a virtual satellite city, which will soon have 110 new
    apartment buildings, along with schools and offices planted like
    potted trees around his neon-lighted mall.

    Perhaps the most aggressive mall building is taking place in Guangdong
    Province in the south, the seat of China's flourishing Pearl River
    Delta region. In January, more than 400,000 people showed up in the
    principal city, Guangzhou, for the opening of the Grandview Mall,
    which also calls itself the world's largest mall, with three million
    square feet. It even says it has the tallest indoor fountain.

    Exactly who has the world's largest shopping mall appears to be in
    dispute. Some Chinese malls claim the largest floor size; others count
    leased space. Still others say that what counts is that there is only
    one roof.

    Indeed, the Triple Five Group, which owns the Mall of America (2.5
    million square feet of leased shopping space) and the West Edmonton
    Mall in Canada (3.2 million square feet), has not conceded defeat.

    "They are just shops, like a bazaar in the Middle East," Nader
    Ghermezian, one of the company's principals, said dismissively - and
    mistakenly - about the Golden Resources Mall, which is under one roof.
    "They shouldn't be considered. We are still the largest in the world."

    But that raises another question: Are the malls in this country too
    big?

    "It's not so easy to shop at these locations," Mr. Hand of Jones Lang
    LaSalle said. "Most shopping centers survive on repeat customers. To
    go to a shopping mall so big and so congested, it may be difficult to
    have repeat customers."

    The developers beg to differ.

    "Shopping malls are a new concept in China, and we are trying to find
    our own way to do it," said Cai Xunshan, vice president of the Golden
    Resources Mall. "We don't think we can just copy the format from the
    U.S."

    In Dongguan, the developers of the South China Mall say they traveled
    around the world for two years in search of the right model. The
    result is a $400 million fantasy land: 150 acres of palm-tree-lined
    shopping plazas, theme parks, hotels, water fountains, pyramids,
    bridges and giant windmills. Trying to exceed even some of the
    over-the-top casino extravaganzas in Las Vegas, it has a 1.3-mile
    artificial river circling the complex, which includes districts
    modeled on the world's seven "famous water cities," and an 85-foot
    replica of the Arc de Triomphe.

    "We have outstanding architecture from around the world," Tong Rui,
    vice chief executive at Sanyuan Yinhui Investment and Development, the
    mall's developer, said as he toured a section modeled on Paris. "You
    can't see this architecture anywhere else in shopping malls."

    Hu Guirong, the man behind the development, made his fortune selling
    noodles and biscuits in China. His aides say he built his mall in
    Dongguan, a fast-growing city whose population is estimated as high as
    eight million, with one of the highest car-to-household ratios in the
    country, because it is situated at a crossroads of two bustling South
    China metropolises, Shenzhen and Guangzhou.

    "We wanted to do something groundbreaking," Mr. Tong said, referring
    to his boss. "We wanted to leave our mark on history."

    But just to keep a seven-million-square-foot shopping center from
    looking deserted, some retailing specialists say, requires 50,000 to
    70,000 visitors a day.

    Officials of the South China Mall say they will easily surpass those
    figures.

    But before the mall is fully open, the Triple Five Group is working to
    reclaim the world title, with three megamalls in the planning stages
    that will expand its operations from its base in North America into
    China.

    Two of them, the Mall of China and the Triple Five Wenzhou Mall, are
    each projected to be 10 million square feet.

    "You'll see," Mr. Ghermezian of Triple Five said. "We are also
    expanding the Mall of America. There's going to be a Phase 2."