China is experiencing a boom in shopping malls as urbanization increases and the middle class grows. An estimated 300 new malls open in China each year, with the total expected to reach 4,000 by 2015. E-commerce is also growing rapidly in China, with online sales projected to reach $4.45 trillion by 2017. Major trends include the rise of mobile commerce, new growth areas like home goods, and social commerce platforms like WeChat changing the retail landscape. The top trends for 2015 include steady consumer market growth, O2O competition intensifying, and innovation driving operational transformation across the retail sector in China.

1. 1
AAFA ANNUAL EXECUTIVE SUMMIT:
CHINA AT THE TIPPING POINT
Deborah Weinswig
Executive Director—Head, Global Retail & Technology
Fung Business Intelligence Centre
March 18, 2015

2. 2
China’s Mall Boom
Source:
Na+onal
Bureau
of
Sta+s+cs
China
0%
20%
40%
60%
Beijing
Chengdu
Chongqing
Dalian
Guangzhou
Harbin
Shanghai
Shenyang
Shenzhen
Tianjin
Wuhan
Share
of
Mega
Malls
in
Selected
Ci3es
Share
of
Shopping
Centers
(GFA>
100,000sqm)
among
all
shopping
centers
• The China Chain Store & Franchise Association (CCFA) estimates that around 300 new
malls are opened in China each year and that the total number of malls will reach 4,000
by 2015.
• Nine out of the top Ten newly completed malls are in China.
• Malls account for the majority of China’s commercial property supplies:
68.3% (Tier 1 cities) and 61.6% (Tier 2 cities).
0
10
20
30
40
0
50
100
150
200
250
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Total
Investment
in
China’s
Commercial
Proper3es
CommulaQve
Commercial
Property
Development
and
Investment
(in
Billions
USD)
YoY
Growth
%

3. 3
What’s Driving China’s Mall Boom?
Urbanization Based on City Clusters and Rise of Middle Class
169.55 million Chinese households will reach $50,000 versus 2.76 million in 2012. (EIU)
Three mature clusters
3.2% of national total land mass
17.3% of national total population
35.1% of national total GDP
30.2% of national total sales of consumer goods.
Eight middle-weight clusters
11% of national land mass
30% of national population
37.8 % of national GDP
34.2% of national total sales of consumer goods.

4. 4
What’s Driving China’s Mall Boom?
• Consumer demand a “lifestyle” shopping
experience some malls in China dedicate 25%
of total floor area to entertainment and dining
facilities. High-end Chinese malls also doubles
as art galleries and fill with culture elements.
• Kid-related facilities at malls attract traffic
China’s one-child policy allows one kid to
attract spending of two parents and six
grandparents in a family.
• Malls are favored property developers due
to the tightening government regulation on
residential property market

5. 5
China Is the World’s Largest Online Market
Source:
iResearch
• Robust
Ecommerce
Growth
The
transacQon
value
of
China’s
online
market
increased
by
39.4%
YoY,
to
reach
¥1.84
trillion
in
2013,
accounQng
for
7.9%
of
the
country’s
total
retail
sales.
By
2017,
total
online
sales
are
expected
to
reach
¥4.45
trillion
yuan,
accounQng
for
12.4%
of
total
retail
sales.
• Growing
Online
Popula3on
China’s
online
populaQon
is
growing
rapidly
to
648
million
as
of
June
2014,including,
127
million
Rural
internet
users
• Mobile
Shopping
Gaining
Trac3on.
The
mobile
pla_orm
is
now
a
highly
popular
sales
and
markeQng
channel.
iResearch
esQmates
that
the
total
transacQon
value
of
mobile
shopping
will
exceed
¥3,207
billion
by
the
end
of
2017,
up
from
¥274
billion
in
2013.
There
are
527
million
mobile
users
in
China
0%
20%
40%
60%
80%
0
200
400
600
800
2010
2011
2012
2013
2014
E
2015
E
2016
E
2017E
China
Ecommerce
Growth
China
Ecommerce
Sales
in
Billions
USD
YoY
Growth
0
200
400
600
2011
2012
2013
2014
E
2015
E
2016
E
2017E
China
Mobile
Commerce
Growth
China
Mobile
Commerce
Sales
in
Billions
USD

6. 6
Major Trends in Chinese Ecommerce
• Home categories are a new growth area in Chinese
e-commerce. Local brands still dominate home
category online sales.
• Overseas merchants leverage 7 FTZ pilot cities and
bonded warehouse to sell in China.
• Chinese tourists shop overseas and demand same
high quality goods when return home
• WeChat shops and its “B2C2C” model
(recommended purchase by friends) have huge
potential to disrupt the two-player market of Alibaba
and JD.com.
• Launching stores on major e-commerce sites is
becoming increasingly expensive due to high
marketing charges and registration capital
requirement.
• Community shopping malls are getting popular.

7. 7
Top 10 Trends for 2015
1. Consumer market sees steady growth; rational consumption a norm
2. Institutional reform of distribution sector, better regulated
3. O2O competition intensifies
4. Wholesale markets undergo transformation and upgrade
5. Luxury market slows; “affordable luxury” gains
6. Department stores and large supermarkets revamp; focus on community stores
7. Innovation drives operational transformation
8. New era of consumerism
9. Catering market under transformation; mass dining trend
10. Express delivery firms scale up
Source:
China
Business
Herald
Research
Ins+tute,
China
General
Chamber
of
Commerce
(and
Expert
CommiAee
of),
Fung
Business
Intelligence
Centre
and
Fung
Group

8. 8
Thank You!
Deborah Weinswig
Executive Director—Head, Global Retail & Technology
Fung Business Intelligence Centre