When foreign executives visit Shanghai, consultant Ali Toure wants to persuade them to invest in the city - so he takes them for dinner in a restaurant in a shopping mall in the Xujiahui commercial district, which has a daily traffic of 800,000.
'It always works,' he said. 'When an executive who lives in a city in Europe or North America sees the numbers and flow in the shopping malls in Xujiahui, he cannot but be impressed.'
The secret of the district's success is its density of malls, variety of products and entertainment facilities, a good transport system and the fact that everyone else is going there. But, if the executives want to repeat the success of Xujiahui, they have probably come too late. Shanghai's retail sector has become the most over-built in the mainland. The city has 15 shopping malls with a total floor space of one million square metres, 14 more under construction with a floor space of two million and further 11 in the application process, with floor space of one million square metres. It also has 124 hypermarkets, each with a floor area of more than 5,000 square metres, including 28 which opened last year. According to plans of the major retailers, this number will double over the next five years.
In convenience stores and supermarket retailing also, Shanghai has store densities far in excess of those in Beijing and even ahead of those in South Korea, with one supermarket per 16,300 people, against 35,700 in South Korea, and one convenience store per 4,100 people, against 9,300 in South Korea. The city has 16,000 franchised chain stories.
This surplus has come about because retail companies, domestic and foreign, see Shanghai as the commercial capital of China, the city that sets the trend for the whole nation, and want to establish themselves there before anywhere else.
Charlie Lin, chief executive of Shanghai Gang Hong Industrial Development, was responsible for building Grand Gateway, one of the biggest malls in Xujiahui, which opened in December 1999, with investment of four billion yuan from the Hang Lung Group of Hong Kong.
'Shopping malls are the future,' he said. 'First, it was department stores and for the past five years it was hypermarkets like Carrefour. Who wants to shop in the rain or the heat when you can walk in a mall with a roof and controlled temperature? Gateway is getting 150,000 visitors a day, with 200,000 to 250,000 a day on weekends, the highest traffic in China. You cannot imagine such numbers in the US.'