To paint the most up-to-date picture of Shenzhen, Qing Na spoke to Dr. Grace Yuehan Wang, who will walk us through the city’s transition and re-examine its role in bringing out a synergy between technology and fashion, as well as in accelerating luxury brands’ penetration in the lucrative market.

Dr. Wang is an academic entrepreneur. She is a visiting fellow of the Department of Media and Communication at the London School of Economics and Political Science. She is also the founder of Network Media, a media and consulting platform focusing on emerging markets in the Global South.

Her current book manuscript examines how Shenzhen, China’s first Special Economic Zone, has evolved from a fishing village to a leading global innovation centre. In addition to her work in the English-speaking world, Dr. Wang also writes and publishes in Mandarin Chinese. Her work: From Silicon Valley to Silicon Delta: Case study of Shenzhen as an informational city was published in the 2020 China Bluebook of Culture and Technology and Tencent: games, finance. Dr. Wang has expertise in analysing market trends and providing insights based on her grounded theoretical knowledge and industrial observation. You can find her on LinkedIn: Grace Yuehan Wang.

What are your observations of Shenzhen’s integration of fashion into its technology sector over the past few years?

Shenzhen’s current transition is not surprising to me at all. When I started to conduct my fieldwork eight years ago, every time I was back in Shenzhen, my interviewees and local guides loved to take me to local museums and galleries. This included Shenzhen’s OCT (Overseas Chinese Town) in the city’s high-tech area, the Nanshan district.

The OCT-loft art district is full of edgy galleries and the surrounding art scene extends further to Hua Art Museum (华 *美术馆, huá * měi shù guǎn) – a graphic design gallery in a renovated warehouse – and Hexiangning Art Museum (何香凝美术馆, hé xiāng níng měi shù guǎn) – home to more traditional Chinese art. There are also many cool bars, coffee shops, independent bookstores, and band music performances in the OCT area. At that time, my instinct told me that Shenzhen would invest a lot in developing its creative and cultural industry in addition to its tech sector. Fashion being one of them.

In my academic research journal publication on talent migration, I documented and analysed the lack of high-end cultural facilities in Shenzhen as well as its impact on the city’s initiatives to attract overseas talent. Shenzhen local government officials have been fully aware of this disadvantage, and they know Shenzhen needs to play a “fine-art taste” catch-up game with the more widely known international metropolitan cities such as Beijing and Shanghai in China. However, they have started taking initiatives, for instance, the 2022 Shenzhen International Youth Design Week.

How would you describe the latest developments in Shenzhen’s fashion landscape?

First and foremost, similar to Shenzhen’s technological innovation success in the past four decades, Shenzhen’s current fashion landscape is partially supported by the local government. As I argued in my academic work, it doesn’t matter if people on the international stage are willing to accept the fact or not, industrial policy and planning play a critical role in Shenzhen’s urban and industrial development, which ultimately is the role of the state in development.

In January 2023, the Shenzhen Bureau of Industry and Information Technology issued an official government document named: Implementation Plan for Digital Transformation of Modern Fashion Industry Clusters in Shenzhen. This plan was formulated to accelerate the digital transformation of the modern fashion industry and promote high-end, digital, and brand development with the goal of creating more Shenzhen brands on the international stage.

Take Tencent and Burberry for example. In July 2020, Shenzhen Bay MixC was opened. It is Burberry’s first social retail store in China’s tech hub, Shenzhen, where Tencent’s headquarters is. This store was viewed as a space for exploration, to inspire and entertain customers who shop luxury brands, with the hope of bringing social media communities customised experiences and exclusive luxury content altogether.

Secondly, Shenzhen’s fashion landscape is closely integrated into the tech sector, as part of China’s push for a digital economy. It is important to keep in mind that economy is the keyword here, fashion and technology are just various means of achieving a greater economy.

How can you realise a better economy through the fashion industry? I think it is time for China to create its own fashion brands, in this context, high-end luxury fashion brands, which is also mentioned in this Shenzhen government document. Located in Guangdong province, Shenzhen is close to many garment manufacturing cities such as Dongguan. Therefore, there is no better place to leverage these regional advantages and unleash the synergy between the tech and fashion sectors to cultivate more homegrown fashion brands.

What are your observations on changes in the city’s consumer demographics and its relation to luxury consumption?

Since 2016, according to the Hurun Global Rich List, the number of Chinese billion-dollar enterprises in China has surpassed the sum of America, the United Kingdom, and India. Among all the Chinese cities, Beijing is home to 144 of the world’s billionaires, followed by Shanghai with 121. There are 113 billionaires in Shenzhen, the top one being in China’s Greater Bay Area (updated in 2022), compared with 110 in New York, while London came in fifth with 101. This provides a clear image of how much Shenzhen has grown from being a fishing village next to Hong Kong to a global city with more billionaires than that of Hong Kong. This is how Shenzhen’s demographics have changed in the last four decades.

In terms of luxury consumer insights, I remember a documentary I watched where a middle-aged Chinese woman, the wife of a first-generation rich Chinese businessman, went to a Versace store to go shopping. She selected all the items and asked the lady at the reception desk: if she can get a discount for the number of items she bought. You might be surprised to see someone at that level of wealth bargaining at a luxury store.

However, I found it fascinating because it accurately demonstrates that a cultural consumption habit has nothing to do with the amount of money someone actually has, but a mindset – always thinking to spend less while getting a lot. That is the elder Chinese generation. They maintain a kind of consumption habit even when they accumulate tremendous wealth. I will discuss what the young Chinese want in your question below.

Can you make some comparisons between Shenzhen, the emerging luxury hub in China and a traditional go-to for luxury brands such as Beijing and Shanghai?

To answer this question, I think it is necessary to define what “traditional go-to luxury brand cities” means. Beijing and Shanghai are usually the two cities that spring to the minds of foreigners when they think of China, and gradually this perception has been reinforced because of foreign media narratives.

The same situation applies to luxury brands that entered or wish to enter the Chinese market, especially many years ago. Shenzhen has gained international recognition in recent years due to its rise in technology companies, its critical role in the global supply chain and its prominence in the manufacturing sector.

Shenzhen’s fashion and luxury sector is lagging behind Beijing and Shanghai in terms of international attention; however, it is growing very fast. I believe the growth potential is far more important in this context.

Secondly, high-end luxury fashion targets a very particular group of people, which includes not only customers but also designers and garment manufacturers. The latter category is often neglected in many analyses and reports. In terms of customers, they usually have high spending power and pursue a certain kind of lifestyle. Some of them are overseas returnees or the so-called ‘Rich Second Generation’. You can find further information in my publication about Shenzhen ranking No.1 in the Youth Population Attractiveness Index in the 2019 China Urban Vitality Research Report.

Shenzhen’s fashion and luxury sector is lagging behind Beijing and Shanghai in terms of international attention; however, it is growing very fast.

Dr. Grace Wang

The youth population in Shenzhen is not equivalent to high consumption power. However, this offers luxury brands opportunities to cultivate a certain group of people in terms of taste, brand loyalty, consumption habits, and so on. In terms of designers and garment manufacturers, Shenzhen is increasingly integrating design, manufacturing, and trade into one core sector. Luxury brands, for instance, could take advantage of this kind of industrial physical proximity to reduce their production and promotion costs. This is Shenzhen’s unique advantage compared to Beijing or Shanghai.

Thirdly, I want to emphasise the local government support again. In 2023’s Shenzhen Fashion Week initiated by the local government, domestic and international design talent and luxury brands were invited. The goal was to create Shenzhen which pioneers in art, design, and fashion. From this, we can easily see the potential of the fashion and luxury market in Shenzhen, and how the city is using its industrial and technological advantages to attract international companies and designers.

What kind of synergy do you think Shenzhen can bring out with its technology innovation advantages and new fashion appeal?

To answer this question, it’s important to look at the characteristics of Gen Z in Shenzhen or China, which include 1) they care about communal influence. For instance, Tencent-Burberry took advantage of WeChat’s communal influence and WeChat’s mini program to try to create an exclusive Burberry consumer community. 2) they care about ownership, but they also treat luxury fashion as a service.

We sometimes read stories on WeChat about consumers, especially women, renting luxury bags or clothing for certain occasions. I think such an occurrence signals the rising opportunity in providing this kind of service, which can be viewed as sustainable fashion. The city’s digital ecosystem can easily turn those services into reality and create luxury rental businesses, which would facilitate global luxury labels’ sustainability efforts and enhance their appeal to the shrewd generation of consumers who are also more environmentally conscious.

How do you think Shenzhen can leverage its technological advances to help the overall recovery and further growth of the luxury industry in China?

High-end luxury fashion brand designers should realise that they are no longer in an era where adding a zodiac animal image to their new release during Lunar New Year appeals to their target audience in China. I do not think it works very well with the young Chinese generation through my interaction and conversations with them. For instance, one time, a friend of mine jokingly said, under this kind of economic uncertainty, maybe purchasing a Hermès handbag is a better investment than buying some stocks.

This shows that the young Chinese nowadays may think of luxury fashion as an investment. When you view something as an investment, you will care about the return on investment. So, the global luxury fashion industry will probably need to rethink its strategies in China. The recovery and growth of China’s luxury and fashion industry depend not only on Chinese customers’ spending capacity and tendency but also on fashion designers’ tailored cultural creativity, luxury companies’ regional strategies, etc.

Creating a technology-enabled luxury and fashion ecosystem is possible. Shenzhen could be an experimental city on the global stage. Like blockchain, wouldn’t it be fascinating to trace every step of your customised Dior dress at your fingertips? I would love to discuss this with fashion and technology enthusiasts (laugh)!

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Around 30 renowned brands landed in the shopping centre in 2022, of which, 23 were some brands’ first store openings in the province, as per the Chinese luxury online publication Luxe.co. Included were Hermès, Celine, Loro Piana, Chloe, Van Cleef & Arpels, Maison Margiela, Roger Viver and Thom Browne. This is on top of existing tenants such as Louis Vuitton, Gucci, Cartier, Burberry and more.

Long queues were observed on the opening day of Hermès’ first store in Zhengzhou on 30 March 2022, and a total of 16 categories from the store’s offerings, including ready-to-wear and suitcases to jewellery and watches, were reported to have almost been “snapped up” by eager local luxury shoppers. This signals the strong purchasing power of the city’s population.

In 2022, Zhengzhou knocked out the highest GDP amongst other cities in Henan, at 1.29 trillion RMB (186.85 billion USD), which accounted for 21.09% of the total GDP of the province, showing its core status in the region’s overall economic performance. The city’s GDP per capita stood at 101,512 RMB (14,703 USD). Although ranking second after its peer, the city of Jiyuan (110,441 RMB, or 15,996 USD), the gap is rather narrow and with a large permanent resident base of 12.74 million (as opposed to 730,000 in Jiyuan), Zhengzhou has a potential to catch-up quickly.

As such the city has been growing in appeal to global luxury brands and Chanel is one of the latest seeking to join, with the brand’s recruitment ad for boutique store manager published in January showing the intention. Luxury label Dior is also seen to have been eyeing up the new market space with a large-scale poster set up on the first floor of David Plaza, according to Luxe.co’s on-site visit in March.

The rise of this shopping centre’s popularity and Zhengzhou being viewed as a new luxury hub will undoubtedly accelerate the recovery of luxury consumption in China post-pandemic. The city will also serve as a stepping stone for global luxury brands in reaching consumers in lower-tier markets, facilitating their further expansion in the country.

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Debuting on Starbucks China’s WeChat official account (a marketing platform on messaging app WeChat), the 41-minute-long program features the coffee chain’s history, the ever-rising nationwide coffee trend, mysterious coffee stories, and so much more. Engaging content was shared by two coffee lovers from Starbucks, both of which have over 9 years of experience in coffee education and coffee bean selections.

The recent move by Starbucks closely infuses the brand’s cultural heritage with professional coffee knowledge, to further appeal to its target audiences and deliver brand value amid the podcast hype at home.

Despite the podcast industry being relatively mature in western countries, the landscape remained untapped in China until 2020. The lengthy pandemic acted as a catalyst for the development of audio and other online content creation. With more podcasters and listeners dipping their toes in, the industry was gradually getting noticed and started to reach new heights.

China’s podcast realm amassed 86 million listeners by 2022 and the figure is projected to reach 200 million by the end of 2024. The main audiences are university students and white-collar workers living in Tier-1 and Tier-2 cities with an average age of 30.2, indicating a much younger user group than other media forms. 

Whilst all the domestic social media platforms are trying to extend into creating eye-catching short-video content to win over users, audio content possesses immense potential. Ear-catching materials enable the young demographics to access the latest news and updates at all times.

As such, an industrial expert Jianbin Gao expressed his positive outlook towards podcasts and implementing marketing strategies, highlighting that “the target audiences living in high-tier cities hold relatively stronger spending powers and would be willing to pay for the quality audio content.”

Eyeing audio content’s immense marketing potential and remarkable ability, Starbucks released its first episode with more to come in the future, aiming to convey its brand culture and to grow consumer awareness, whilst prepping for future business development opportunities through the lens of coffee. 

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This program is embedded in Kuaishou’s own ecosystem, aiming to connect users through online content and featured services, promoted through short videos and live stream. In celebration of the program’s release, storefronts in partnership with Kuaishou offered group buying coupons for users. To better integrate the local lifestyle ecosystem, Kuaishou merged its e-commerce team with marketing in a bid to divert online traffic in a more efficient way.

Apart from the self-operated program, users can also place food orders through third-party platforms such as takeout retailers Meituan. Kuaishou users can easily land on the checkout page of Meituan to complete certain product purchases via links displayed in short videos they’ve watched.

The local lifestyle market commands a vast room with lucrative business opportunities, amassing a value of 19.5 trillion RMB ($2.81 trillion) with an expectation to reach 35.3 trillion RMB ($5.09 trillion) by 2025. As such domestic social media players are scrambling to grab a foothold, with WeChat included, initiating takeout services in China and Douyin dipping its toes in the online supermarket segment. 

As short-video platforms, Kuaishou and Douyin possess a noticeable edge compared to other contenders, enabling them both a smooth entry into the takeaway business, providing consumers with seamless experiences when placing orders while watching videos or live streams. 

In contrast to Douyin, Kuaishou’s “Lao’tie culture” (refers to one’s close friend in northern China) has equipped the platform with benefits which resonates strongly with users and thus, witnessed a 70% returning consumer rate. Furthermore, Kuaishou has already expanded into the lower-tier marketplace in China, with 54.5% of its users coming from tier-3 and even lower areas.

By timely tapping into the territory, Kuaishou still has opportunities to carry out its lifestyle-oriented program and promote new practices with a sturdy user base and strong consumer bond.

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Dubbed “City As Studio”, the extensive exhibition aims to showcase street art’s history from its emergence at subway stations and parking lots in 1970s New York through to today, as a global phenomenon across generations, whilst triggering discussions and explorations of the art form’s future development.

Insightful topics are involved in the pioneering art pieces, such as female artists’ contributions to this traditionally male-dominant industry; the impact of 70s and 80s street art on city development; how early practitioners’ work inspire today’s younger demographics in the art genre.

In combination with the artwork display, a series of events will be launched for all age groups to enrich audiences’ understanding of street art, including lectures, screenings, audio guides, docent-led tours, and graffiti-themed interactive activities with educational resources available to view online.

Curator Jeffrey Deitch who has been actively advocating for graffiti and street art since 1980, commented on the exhibition, “City As Studio is a landmark exhibition in China in terms of wide breadth and depth, covering ground-breaking styles created at London, New York, Los Angeles, São Paulo, Paris and Tokyo.” 

Prior to this exhibition, Hong Kong has hosted many major international art events such as the Art Basel, French May, International Arts Carnival, Hong Kong International Jazz Festival, and the International Arts & Collectibles Expo. Along with presenting China’s first major graffiti exhibition, Hong Kong has showcased its dazzling atmosphere for art and endeavours to step up as a global art and culture hub.

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The new store is comprised of 3,000 square metres, debuting the MUJI Farm for the first time in China, and providing organic food and farm-to-table dining experience for local consumers, along with selling homeware items, everyday apparel, beauty cosmetics and daily use products. 

“MUJI Farm” is centralised on growing healthy vegetables in organic garden soil with a minimal amount of agricultural chemicals. In partnership with a Shanghai farm, freshly harvested spinach, beetroot, cabbage, curly kale and other types of seasonal veggies will be delivered to the MUJI store within 24 hours. Consumers are encouraged to enjoy salads produced using locally grown ingredients in the MUJI Diner canteen, driving the farm-to-table lifestyle concept.

As for the MUJI Farm proposal, “it was inspired by the growing health awareness among Chinese citizens,” according to the spokesperson for MUJI China. By doing so, the Japanese retailer can deliver pleasantly-tasting products with guaranteed quality to local consumers. Apart from the farm-fresh vegetables, the MUJI Wine and Tea Workshop also made their first appearance at the newly opened storefront, coming with a wide array of options to cater to the tastes of different demographics.

The massive COVID outbreak in China led to the country’s booming awareness and pursuit of healthier lifestyles. In terms of purchasing foods, good-quality and fresh, price-setting as well as green and healthy have become the top three factors which influence consumers’ decisions, as per a consumption report released by Deloitte.

As such, debuting the MUJI Farm in Shanghai, the international city renowned for its modernism, showcases the Japanese retailer’s insightful observation towards local consumer trends and the green food industry. With the country’s economy getting back on track, consumer traffic is noticeably increasing, and MUJI remains bullish of the market landscape and envisions future sales growth.

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Nanchang is the capital city of Jiangxi Province, south-eastern China, and has a population of 6.26 million as of 2020. The city had the highest GDP among Jiangxi Province in 2021, amounting to 49.76 billion RMB ($7.23 billion), which is reported to rank 15th among the top 20 fastest growing cities in the world. 

However, Nanchang has long been neglected by luxury brands and only possesses a few high-end commercial centres. As a result, local consumers have to travel to neighbouring cities such as Wuhan to purchase luxury goods.

By spotting a gap in the market, up to 25 premium labels, ranging from fashion clothing, jewellery & watches through to beauty cosmetics, decided to land their storefronts in the shopping complex of Wushang Mall, which is slated to open in Q1 2023. 

Brands such as Louis Vuitton, Burberry, Cartier, Tiffany & Co., Rolex, Bulgari, Lancôme, Estée Lauder, Qeelin, Jaeger-LeCoultre and Balmain are included, with this being the French fashion house’s first expedition into Central China.

Besides the lucrative potential of the local market in Nanchang, the established reputation of Wushang Group is another factor which drew in luxury players. The shopping complex run by Wushang Group in Wuhan delivered an outstanding performance among its peers nationwide, with its sales totalling 15 billion RMB ($2.18 USD) in 2021.

As for the upcoming Wushang Mall in Nanchang, the shopping complex is comprised of 160,000 square metres and will sit in the city centre, aiming to become a regional landmark, which is aligned with the brand images of the featured luxury labels.

Over the past few years, luxury brands have strived to chart their expansions into China’s lower-Tier cities so as to branch out to local consumers and the trend is expected to continue. Louis Vuitton is reported to fill all the capital cities in China with its boutiques by 2025 and Nanchang is the first stop.

In comparison to widely recognised brands like Louis Vuitton and Coach, lesser-known labels such as Moschino and Balmain may acquire more time to leverage brand awareness and appeal to local shoppers. By partnering with established shopping plazas and brands which hold an immense fanbase, this could be considered a positive approach in terms of regional consumers’ great appetite towards luxury goods. 

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The fast-food giant released its 2022 financial report representing great financial performance over the last year, with the generated revenue totalling 23.18 billion USD, equating to a 5% growth year-on-year.

As outlined in the report, McDonald’s is ready to carry on its aggressive global expansion this year with over 1,900 new stores set to open. Almost half of which are expected to land in China, indicating the country’s exceptionally profitable climate in the fast-food industry.

According to 36Kr, a domestic media outlet, there are two main reasons why McDonald’s is focused on the Chinese market. First and foremost, the country’s tier-1 cities like Shanghai showcased a strong consumption resilience during the lengthy pandemic, with its retail industry sales increasing by 1% yearly in Q3 of 2022.

Additionally, new possibilities in China’s lower-tier cities are still to be unlocked as the overall consumption ecosystems there are not yet mature, thus, increasing penetration in these marketplaces has become the main focus for McDonald’s.

Meanwhile, McCafé which is a coffee concept owned by McDonald’s is also expected to launch 1,000 new storefronts in China in 2023, mainly covering tier-3 cities where coffee is gaining increasing popularity amongst local citizens. In order to cater to local consumers’ tastes, McCafé underwent a comprehensive upgrade in China last August, launching a series of beverages made with milk and coffee. 

Thanks to its giant consumer base and developed business operation, McDonald’s possesses a strong ability to handle marketplace risks such as the pandemic. However, the fast-food giant still needs to pay attention to the changeable environment in the Chinese food industry, as the nation’s restaurant sales saw a yearly decline of 4.6% in the first 9 months of 2022.

Thus, during the process of setting a foothold in lower-tier cities, implementing promotional strategies to maintain existing consumers while appealing to new ones is of importance.

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The announcement was made at the High-Quality Development Conference held by the Guangdong government on the first working day after the Lunar New Year break, which was joined by over 500 companies with tens of thousands of industry attendees.

The relocated supply chain centre is set to cover import and export businesses outlined in the Regional Comprehensive Economic Partnership (RCEP), which is the first trade agreement amongst some of the world’s major economies in Asia-Pacific, such as Australia, China, Japan, South Korea, and Singapore. Meanwhile, it also serves markets along the Belt and Road initiatives.

Speaking at the conference in the capital city Guangzhou, Xu expressed “the company is confident in the Chinese market”, which has become the second-largest regional market for P&G since the company’s entry in 1988. While serving as P&G’s headquarters in China, Guangdong also houses its largest production base.

The China boss also unveiled the brand’s ambitions in digitalisation and promised a minimum of 100 new product releases annually, facilitated by its research and development arm and further driving the upgrade in consumption. Alongside the move, the brand is also determined to double down efforts in diversifying sales channels while ramping up its building of live stream commerce.

Prior to P&G, its British peer Unilever had also set its sights on the Cantonese-speaking region, bringing its first full-line production and marketing base to the city of Guangzhou in August 2022. The “largest investment project” the British label has ever had in China in recent years, which is worth a total of 1.6 billion RMB (235.83 million USD). It is expected to generate approximately 10 billion RMB (1.47 billion USD) annual output value once production lines for personal care products, food, and ice cream come into operation which is scheduled for 2023, 2024, and 2025 respectively.   

The latest move by P&G proves the strategic significance of China’s largest manufacturing hub for global retailers. The coastal province of Southeast China has played a crucial role in driving the country’s economic growth, contributing to the highest provincial GDP in 2022 at 12 trillion RMB (1.7 trillion USD), as per the latest statistics from China’s National Bureau of Statistics.

Bordering Hong Kong and Macau, which is at the heart of the Greater Bay Area (an integrated economic area consisting of nine cities in the Guangdong province and the two Special Administrative Regions), the migrated centre is also expected to be an engine, speeding up P&G’s further growth in the target region while also facilitating its development in Europe.

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Among the observations, the rental business appeared to be trending along with travel. The number of searches for rental goods like cameras, camera lenses and cars saw noticeable increases on the Alipay platform, with a yearly growth of 200%, 100% and 50% respectively. Dealing with flat batteries including mobile phones and cars was a common issue amongst travellers, which led to demands for charging and charging pile (used to charge electric vehicles) soaring by 300% and 150%.

Meanwhile, searches such as ‘help feed pet at my home’ on the Alipay platform jumped by 200% compared to that of last year. As millions of pet owners from larger Tier-1 or Tier-2 cities had to travel back to their hometowns for family gatherings, this marked a shift in pet owner demographics from older generations living in rural areas to city-dwelling youngsters.

Local consumers’ enthusiasm for travel and spending boosted sales in offline shopping districts. Cities like Nanjing, Changsha, Hangzhou, Xiamen and Chongqing experienced a tourism influx along with spending recovery in downtown locations and shopping districts. Some popular tourist destinations favoured by local consumers like Zhangjiakou in China’s northern Hebei Province and Xishuangbanna in China’s southwest Yunnan Province saw a staggering 1000% increase in consumer spending. 

Apart from regional travel, outbound tourism also took off. Sales of overseas travel insurance through the platform jumped by 6100%. China’s Hong Kong and Macao topped the list of the most favourable cross-border travel destinations for Mainland Chinese Alipay users. 

Alipay has transformed from a payment tool to an open platform with integrated business sectors serving more than one billion consumers, the observations gleaned from the platform provide an insightful snapshot of the country’s normalised consumer behaviours, demonstrating that China’s economy is recovering at a relatively rapid pace surrounded by positive consumer sentiments, exciting travel enthusiasm as well as rebound offline shopping activities.

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