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  • Aug 1, 2014
  • Updated: 4:52am

Luohu planners consumed by a risky ambition

PUBLISHED : Saturday, 21 July, 2012, 12:00am
UPDATED : Saturday, 21 July, 2012, 12:00am

Luohu in central Shenzhen has long been dubbed 'Hong Kong's backyard', with hordes of Hongkongers heading across the river for cheap goods and services.

But now Shenzhen authorities say they plan to invest more than 250 billion yuan (HK$302 billion) in the next five to 10 years to make the 78-square-kilometre district an 'international consumption centre'.

According to media reports, the official blueprint calls for a new shopping district with an estimated 260 billion yuan in economic output and 160 billion yuan in retail sales by 2020, double the figures from 2009. Luohu would no longer be a shopping backyard but a high-end shopping paradise and fashion capital to match Hong Kong.

International consultants have been invited to help polish Luohu and improve its transport, industrial mix, land use and landscaping.

District officials plan to spend 100 billion yuan in the next five years to renovate its five major areas: Caiwuwei, Sungang-Qingshuihe, Shuibei-Buxin, Shennandong and Liantang. A cluster of landmark facilities will be built, including a 666-metre financial and commercial centre, five-star hotels, luxury shopping malls and trading and processing centres for jewellery, watches and cars.

Luohu's move follows signs that Shenzhen's economy is slowing amid global uncertainty. Investing heavily is again being seen as the cure-all for its economic ills.

But are such plans realistic?

The district was the first established in Shenzhen and was once the city's most developed region, capitalising on its closeness to Hong Kong. But it has been marginalised in recent years as Shenzhen has switched its industrial focus to hi-tech innovation and expanded the city westwards, with more border-crossing points opening up.

Lowu Commercial City, right next to the immigration checkpoint, was long regarded as a microcosm of Luohu, catering to Hongkongers in search of made-to-measure clothing, handbags, shoes, pirated DVDs and designer knock-offs - all at rock-bottom prices. At its peak a few years ago, 30,000 Hong Kong shoppers a day descended on the area, with that number doubling on holidays.

Luohu also became known for its nightlife, with official statistics showing that more than 500,000 Hongkongers regularly crossed the border for shopping and leisure.

But things have changed. Hongkongers are spending less in Shenzhen because of inflation on the mainland and residents have been heading to Hong Kong to do their shopping.

In an effort to boost the flow of consumers, Luohu has upgraded its main commercial area, now dubbed the 'Golden Triangle of Lowu' and featuring hot spots for restaurants and bars, recreation and a full range of shopping options.

The question for the authorities is: if you build it, will they come?

'Shenzhen residents all know that Luohu is well-known for its shopping opportunities, like precise copies of LV, Gucci and Dior in Lowu Commercial City and the genuine ones in Vientiane City,' said Wenday Liu, a Shenzhen-based operations manager. 'Cheap stores are right next to luxurious shopping malls.

'But the fact is we seldom shop there. There are also similar shopping malls in other districts for everyday commodities and it's a much better deal to shop for luxury goods in Hong Kong.'

Hongkonger Jay Lee said the first things that came to mind when thinking of Luohu were night clubs and imitation goods.

'Now there's an increasing number of giant shopping centres in Luohu but there's a lack of consumers, either domestic or foreign,' Lee said.

'Besides, it's odd to hope to turn Luohu into an international consumption centre because Hong Kong is already a world-renowned centre of that kind and even it is struggling due to the economic downturn.'

Economic analyst Jin Xinyi, who is also a member of the city's Chinese People's Political Consultative Conference, said that becoming an 'international consumption centre' was an impractical goal.

'The wish is beautiful but Luohu is not even the consumption centre of Shenzhen,' Jin said. 'In 2010, it accounted for only 20 per cent of Shenzhen's sales of consumer products.

'Besides, if Luohu is to be an international consumption centre, Shenzhen has to be a world-class metropolis, but it's not as famous as places such as Bangkok and Taipei.

'Thirdly, many local authorities on the mainland say they want to build their regions into international consumption centres, including those in Shanghai, Guangzhou and Hainan. But rich mainlanders are losing interest in shopping in Hong Kong and turning instead to London, New York and Paris.

'Hong Kong is fading as a shopping paradise. And Luohu wants to catch up with that?'

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