In The News : 2002

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Great Mall of China

October 1, 2002
This article also appears on another site: Shopping Centers Today

GREAT MALL OF CHINA

Country's first U.S.-style enclosed center planned for Beijing

By Susan Thorne

Developers envisage a landmark four-level mixed-use center with 3.4 million square feet of retail space and several floors of apartments.

Plans are afoot to build China's first North American-style suburban mall.

Beijing Mall, to be developed in a suburban community on the southeast periphery of the capital, will occupy a greenfield site about 45 minutes' drive from Tiananmen Square in a fast-growing new technology corridor. The center, an initiative of Beijing-based Dadi Investment Co., is envisioned as a mixed-use enclosed mall with 320,000 square meters (3.4 million square feet) of retail space on four levels and residences grouped around central galleries. Its opening is set for late 2004 or early 2005, and it will cost 2.4 billion yuan ($290 million).

The developers anticipate that Beijing Mall will become China's landmark suburban shopping center, much as Bluewater, the highly acclaimed mall outside London, has been for Britain.

"We want this to represent the best of suburban malls," said Dadi CEO Wei Wang, who sees the center as a milestone in China's quest for closer integration into the world commercial community. China joined the World Trade Organization last year, and such major foreign retailers as Carrefour and Wal-Mart have been entering the country recently. In addition, Beijing has been chosen as the site of the 2008 Olympics.

Beijing Mall is innovative for China. The traditional, Japanese-style multistory department store is still dominant in Chinese retail, explained Wang, and though there are other shopping centers in Beijing, they are generally not of significant size. Beijing Mall will be the largest regional mall in China, and it will break new ground by offering such entertainment as an ice rink.

Wang said that the combination of entertainment and retail is important.

"People when they are shopping today don't just want to shop - they want new experiences," he noted, adding that the mall's name (government permission was required for use of the name Beijing) is another marketing strength.

The mall's location in Beijing's economic and technology development area, designated for the high-tech industry, provides it with a well-off primary consumer market from the new towns on the capital's outskirts.

"These are mostly young to middle-aged residents from the middle class, including young families who want their own townhouse, young professionals and empty nesters," said Dave Moreno, senior vice president and design principal at The Jerde Partnership, Los Angeles, the project's co-designer. These are sophisticated, internationally aware shoppers, he noted. "They're the kind of people who read about the Mall of America or Horton Plaza."

This emerging middle class has spending patterns similar to those of North America's middle market, except that its earnings are lower, Moreno pointed out. Consequently, Beijing Mall will have a high proportion of popularly priced merchandise and a smaller high-fashion retail component than a U.S. hyper-regional. All price points from discount to upscale will be represented, however, and merchandise offerings will be comprehensive. A hypermarket, a home improvement retailer and four department stores will be the anchors, and the 600 specialty retailers will include such categories as box discounters and purveyors of electronics, recreational and sporting goods, apparel and lifestyle merchandise. The top floor will have several restaurants and a virtual-reality children's zone; additional recreational facilities such as a bowling alley and a multiplex cinema are planned.

"This will be the first suburban mall in the sense of being a lifestyle, leisure and entertainment destination," said Moreno. "It's more than just a stack of shops."

The mall represents a good opportunity for North American retailers who want to break into the Chinese market, said Howard S. Wong, vice president of retail at Jones Lang LaSalle, Los Angeles, the project's leasing agents. Most foreign retailers entering China over the past decade have been Asian, but Western players will be encouraged by conditions at the mall, according to Wong.

"Here you can have the store size you typically have, from 50,000 to 200,000 square feet," he said. "It's not like a multistory mall. The scale is in line with Western retailing." Wong points out that the Chinese market is ready for branded retailers with multiple locations, as Wal-Mart and Starbucks are proving. No specific mall tenants have been announced to date, however.

Beijing Mall will be organized into eight districts, each wrapped around a central courtyard.

Chinese purchasing power may be limited, but the number of potential visitors to Beijing Mall is staggering: Nearly 8 million people live within a 15-minute drive of the center, Wang said, and an additional 5 million form a tertiary market. Add to that a further 9 million from the nearby city of Tianjin, and the total catchment is 22 million.

"The potential is very good," Wang said. Retail spending in the area is healthy too. Beijing retail sales totaled $20 billion in 2001, and have been growing at an average rate of 11.5 percent yearly since 1996, Dadi data show. The city has China's highest per capita purchasing power and the highest rate of car ownership, Wang said.

The Jerde Partnership has created a contemporary design for Beijing Mall that is ultramodern for China. The overall layout, inspired by the sinuous shape of a dragon, makes generous use of flowing, curved lines within the rectangular site. The curvilinear shapes not only conform to shoppers' preferred strolling patterns, explained Moreno, but they are good for sight lines, so that storefronts can be seen from different vantage points.

The center will be organized into eight separate districts (eight is a lucky number in China) based on such merchandise categories as children's retail, high fashion, sports and recreation. Each district will be wrapped around a central courtyard with an abstract theme of its own taken from qualities of the human spirit and emotions. Celebration Court will have colorful banners and music, while Wisdom Court could have museum and galleries. The mall's central Dragon Court will have a large pool and fountains, and chrome columns (suggestive of a dragon's spikes) holding up a translucent lightweight fabric roof.

But the look will not be excessively opulent, Moreno pointed out. "People don't have a lot of money, and they are put off by things that look expensive. So we will use a lot of approachable, natural materials such as local tile and stone."

Theming will be suggested subtly.

"When you're too literal with a theme, there's only one way you can perceive it," Moreno said. "We want to keep things abstract, so there are more possibilities, and people can develop their own themes."

The mixed-use character of Beijing Mall is something virtually unknown in China, but Moreno said he feels that this approach has just as much validity in Beijing as in more mature retail markets.

"The malls of the future are not just shopping centers," he said. "They are town centers and community meeting places with banks, office space and residential units."