China property

China brands are the next draw for local shopping malls, says Chinese developer

  • The company says it aims to operate 100 shopping malls by 2020
  • It vows to support local brand tenants with marketing, product development and financing
PUBLISHED : Tuesday, 11 December, 2018, 12:02pm
UPDATED : Tuesday, 11 December, 2018, 7:59pm

Future Land Development Holdings, the eighth-largest mainland developer by sales, is upping its ante on indigenous brands to bolster its commercial property business with plans to double the number of shopping centres it operates in two years.

Chen Deli, co-president of the Hong Kong-listed developer, said the company would reserve more space for indigenous retail brands that can cater to mainland consumers’ surging demands for premium products.

“We want to do something concrete to support local brands in our 100 Wuyue shopping centres,” he said, referring to areas in marketing, product development and financing for tenants without providing the amount of money the company would invest.

Increasing its focus on commercial properties would help Jiangsu province-based Future Land sustain growth and offset a residential property market slump. The developer currently operates 42 Wuyue-branded shopping malls on the mainland, and is building another 48 commercial projects under the same brand, aiming to bring the total to 100 in 70 Chinese cities by 2020.

It recently signed agreements with six Chinese brands including jewellery chain store June.Wu and garment maker Leemonsan to help them expand their footprints in Wuyue shopping centres across the mainland.

The number of our shopping malls is not a focal point as we expand the scale of our commercial property segment
Ouyang Jie, Future Land Development Holdings

The company was among the fastest-growing developers on the mainland over the past two years despite the government’s austerity measures to curb the housing market.

It raked in housing contract sales of 126.5 billion yuan (US$18.4 billion) in 2017, up 94.3 per cent from a year earlier. This year, it sold 181.3 billion yuan of housing contracts in the first 10 months, beating its 2018 target of 180 billion yuan two months ahead of time.

Housing contracts refer to sales of partially built homes.

Analysts predicted that Jiangsu province-based Future Land could record housing contract sales of 230 billion yuan this year.

Future Land has been seeking growth in the commercial property segment since 2015 to capitalise on mainlanders’ increasing spending power, as conventional shopping mall operators grapple with competition not only from e-tailers but also their expansion into operating bricks-and-mortar stores.

Chairman Wang Zhenhua said well-designed and operated malls could give visitors a pleasant experience by offering them a full range of entertainment activities, which online shopping cannot provide.

China’s commercial property prices to fall next year as the liquidity crunch inflicts more pain on the industry

Future Land earned 1.36 billion yuan of rental income and management fee from its commercial property operations in the first three quarters this year, a 166 per cent surge from the same period in 2017.

“The number of our shopping malls is not a focal point as we expand the scale of our commercial property segment,” said Ouyang Jie a senior vice-president of Future Land. “We understand that the key to success lies in the efforts to attract shoppers by offering them enjoyable shopping experience.”

China’s ‘consumption upgrade’ trend undeterred by US-China trade war, study says

Future Land’s move to support domestic Chinese brands is in line with findings from a joint survey by global consultancy Bain & Co and market research firm Kantar Worldpanels, which showed that nearly 50 insurgent local brands of non-durable goods, with their abundant knowledge about the mainland market, grew at least two times faster than the average for their category that included foreign brands.

“Local brands can grow faster than their foreign rivals because they know how to design products for Chinese consumers, make decisions quickly and seize opportunities to accelerate expansion pace,” said Jason Yu, general manager of Kantar Worldpanel China.

Hong Kong-listed shares of Future Land have risen 5 per cent so far this year to close at HK$4.86 (62 US cents) on Monday.