Developer puts $3b into US-style mall
A developer is investing 3.3 billion yuan (about HK$3.09 billion) on Beijing's first American-style shopping mall, hoping consumer spending habits will follow those of Europe and the United States and be built around the car.
On Thursday, ground was broken on a 37-hectare site in southeast Beijing for a shopping, entertainment and leisure complex covering 600,000 square metres, with up to 8,000 parking spaces, an official for the developer, the Da Di (Great Earth) Group said.
Economists are sceptical about the project and say Beijing is suffering from a glut of retail space, intense competition and price-cutting and may not be able to absorb such a large new addition of space, equal to that of the Xidan and Qianmen commercial areas, two of the largest traditional shopping districts.
The glut is expected to worsen with major foreign retailers moving into the city with the easing of restrictions after China joins the World Trade Organisation.
The first phase is due to open in October 2003, in the Yizhuang Economic and Technology Zone, next to the Beijing-Tianjin expressway and the fifth ring road.
The complex is designed to include a swimming pool, skating rink, cinemas and a theme garden, in addition to department stores, including Printemps, Wal-Mart and Macy's, four big supermarkets, 300 franchise shops, restaurants, a food street, tea shops and coffee bars, the official said.
Zhang Jinhua, an assistant to Great Earth's chairman, said it would be the first of four malls in Beijing approved by the commerce committee of the city government.
'The concept was born in the United States and spread to Europe in the 1980s and later to Japan and southeast Asia. Ours will be the first real, comprehensive shopping mall in Beijing,' he said. 'Following the models of US and Europe, we chose a suburban site, because the land there costs a fraction of the price in the city centre, more space is available and it is more convenient for cars.'
Asked about the existing glut of retail space, Mr Zhang said that while Beijing had many department stores and commercial areas, the goods were in different places and no one place could satisfy all the demand of consumers.
'Ours will be able to meet that demand and it will have in addition entertainment and health clubs. We are following the foreign model,' he said.
He said Beijing ranked first in China in car ownership and consumer spending.
Great Earth's chairman Xu Ming expressed optimism about the project: 'We need annual turnover of 3.5 billion yuan to break even. We will get a return on our capital within 10 years.'
Three other malls are under construction in China, two in Shanghai and one in Shenzhen.
