Shanghai’s gleaming shopping malls are temples to luxury consumption. Only one thing is missing: customers.
In the end, the price tag explains everything. We are staring in the window a luxury goods shop in a swanky mall in Shanghai, looking in at the beautiful displays while a gaggle of sales assistants apprise us. No one else is in the shop; in fact, no one is in any of the shops in this mall, in an upmarket area of Shanghai surrounded by modern office blocks.
It’s lunchtime on a warm weekday just after Mid-Autumn Festival, and the streets outside are busy. The mall’s restaurants on the top floor are also packed with diners eating dim sum, noodles and European brasserie food. Sales assistants on the empty floors below pass the time chatting to each other or rearranging the displays of the top European and American fashions, watches and handbags.
A quick check on our smartphones explains what’s happening: prices in this mall are high, much higher than in the equivalent shops in London, Paris or New York. A quick search on Baidu also brings up reputable online retailers in China who also easily undercut the mall’s prices on some sample items.
Over drinks that evening, we ask one of our clients, a well-groomed professional Shanghai resident, what’s happening. “Oh, no one actually buys anything in these shops,” she says. “we might pop in to look at a new collection, but we go to Hong Kong to buy or get it online.” Another contact says that she never shops in Shanghai but spent 80,000RMB (£8,000, US$13,000) in her 8-day trip to Paris last year. “It is very good deal!” she says firmly.
A similar trend appears to have encompassed luxury wine. In another Shanghai (largely empty) mall we find a beautiful wine boutique, carrying some excellent wines from the Old and New World. The top priced item is a bottle of Chateau Lafite 2006 (it looks genuine) retailing for RMB 20,000 (£2,000, US$ 3,300). A week later, walking through the Harrods wine department in London, I find the same vintage of Lafite retailing for £1,200 a bottle.
The moral of the story – which is sometimes conveniently forgotten in the rush to build presence in China – is that Chinese consumers may aspire to own a piece of western brand heritage and elegance, but this motivation doesn’t suddenly make them stupid. There is a long tradition in China of price-consciousness and a strong cultural aversion to being ripped off; almost an obsession with getting a good deal so they can tell their friends and family how wise they are.