Much of the attention during China’s economic rise has been focused on the Eastern seaboard where powerhouse cities Shanghai and Beijing are located. But more recently, as part of the government’s Go West policy, South-western Chengdu and Chongqing are steaming ahead.
Both cities were part of Sichuan province, before Chongqing became so economically prosperous and became its own autonomous city-state. Traditionally Sichuanese have been stereotypically labeled as both kindly and unkindly as “laid back” compared to their Eastern neighbors.
But recent foreign investment and rapid growth, has placed both cities at the forefront of the next wave of development and consumerism in China. Here is a digestable summary of why they are important, and why they form a key part of Resonance China and SMART’s strategic advice to clients.
Chengdu – China’s Silicon Valley
The Chengdu government lays claim to the city producing half of the world’s Ipads and the same proportion of Intel’ s laptop computer chips. Also Camera 360, a selfie-taking app with a ‘beautify’ function that broke China’s internet, was born in the city.
Chengdu has become the nation’s third biggest purchaser of luxury goods, after Shanghai and Beijing. But from a cultural perspective, Chengdu residents tend to buy for themselves more than other Chinese consumers, with 80% of purchases focused on the buyer themselves.
Two major shopping complexes – Taikoo Li and IFS – have opened in recent years creating a local luxury scene that showcases 80% of major luxury brands. In tandem, the city is also becoming a leading fashion center reflecting a different cultural expression from China’s eastern cities.
Chengdu has also successfully branded itself as a city destination, creating healthy flows of domestic and foreign visitors – creating a reputation as an internationally focussed location.
Chongqing – A crucial nexus for China’s future
According to HSBC, Chongqing was the fastest growing large city in China last year – growing 11% in 2015, a figure far above the national average. The city economy has grown to 12 times the size it was in 1998.
Chongqing occupies a key strategic location within China’s rail, shipping and technological ambitions. It is the Western staring point of the New Silk Road – or ‘One Belt, One Road’ policy – that creates 16 day rail freight across 11,000 kms of continental Asia to its Eastern end-point, Duisburg in Germany. Also as part of the policy, Chongqing provides the key port on the Yangtze River, and a vital airlink with South-east Asia.
The strategic significance of Chongqing provides the basis for what will be one of the strongest growing city economies in the world, with predictions the city’s population will reach 22 million by 2018.
Chengdu, Chongqing an essential part of our SMART approach
As part of our consumer connection work, Chengdu and Chongqing are important consideration to give our clients full context on their Chinese challenge. The culture of the two cities, sits between first and second tier, meaning consumers in these cities are fantastic barometers of ‘where China is heading’. Our research, especially our ethnographic work in Chengdu/Chongqing has allowed us to uncover ‘little clues’ that suggest how local consumers are balancing the pressures of modernity and tradition in their lifestyles.
An interesting observation, is that Chengdu and Chongqing residents are less enamoured with Western culture, tending to hold steadfast on Chinese principles and engaging with Korean popular culture as an bridging mechanism. To observe a fridge in either of these cities is a wonder, as consumers are experimenting with international foods, but localizing them with spices and seasoning – a big opportunity for any brave FMCG brand.
SMART will head to Chengdu twice this week, to DEEP DIVE with local consumers – with their permission, we will be very nosey indeed. Last time, I filmed a consumer on his motorbike, so I could capture his point-of-view on the city, made for some very powerful consumer film.
Contact us to see a presentation of SMART’s film, consumer reports and approach to getting deeper insight.