Looking down at Xintandi in central Shanghai. Xintandi is an up-market shopping and restaurant complex that has been hugely successful in generating interest in fine dining and fine living. (Photo by Ryan Pyle/Corbis via Getty Images)
Corbis via Getty Images
How to boost China’s consumer spending as a share of GDP is a hot topic in the country and around the world. The chairman of the developer behind one of China’s most iconic retail and commercial real estate projects, Xintiandi, weighed in on current consumer trends in a note in a financial report this week.
Shifting consumer attitudes and economic uncertainty are leading to major changes in China’s retail spending, Shui On Land Chairman Vincent Lo wrote in the Hong Kong-listed company’s latest interim report posted on Wednesday.
“China’s retail landscape is undergoing a major change, with fluctuating consumer attitudes and an uncertain economic outlook, as consumption transitions from being largely price-oriented to more value-oriented and experience-led,” Lo wrote in his chairman’s note.
Domestic consumption is an important component of economic activity, Lo said, “but has been held back by weak consumer confidence, restraining growth. Stimulating domestic demand will therefore continue to be a key task in the years ahead.”
In a report in June, the World Bank said China’s GDP growth is on track to moderate from 5.0% in 2024 to 4.5% in 2025 and 4.0% in 2026 as global trade restrictions and uncertainty weigh on exports, manufacturing investment, and labor demand. “Beyond short-term stimulus, China will need to rely more on household consumption as an engine of growth. A sustained improvement in household consumption will require greater reform ambition,” it noted.
Xintiandi opened in central Shanghai in 2001. Rather than demolish dilapidated buildings and build new apartments that would sell out quickly, Shui On and main architect Benjamin Wood preserved many of the original construction materials in the area and turned it into an icon for city visitors that is viewed by millions every year. Retail tenants include dozens of global brands such as lululemon and Salomon. Just this month, Italy’s Ludovico Martelli opened a dedicated Xintiandi shop for its flavorful Marvis toothpaste; Marvis costs the equivalent of more than $10 a tube.
The newly opened Marvis toothpaste shop in Xintiandi in Shanghai.
Marvis
Shui On’s Xintiandi retail properties are benefitting from the shift in the consumer landscape “thanks to the unique lifestyle experiences they offer,” Lo said in his note. Consequently, they were able to maintain high occupancy rates, averaging 94% in the first six months of the year, while footfall and sales increased by 10.5% during the period, he wrote. Investors have lifted Shui On’s stock price by more than 7% in the past year.
Lo is a member of one of Hong Kong’s most storied business families. Success started with his father, Lo Ying Shek who launched the family’s original flagship Great Eagle as a real estate development company in 1963. Ambitious Vincent remains on the board at Hong Kong-listed Great Eagle, yet struck out on his own in 1971, borrowing HK$100,000 from his father to go into construction materials. “He had a lot of determination from the time he was young,” older brother K.S. Lo told Forbes Asia in an interview in 2010.
Vincent arrived in the mainland in 1982 and not long afterward established himself as “Mr. Shanghai,” a commercial advocate for the city. He took his Shui On Construction & Materials public in Hong Kong in 1997; real estate investments were eventually rolled into Shui On Land in 2004, which went public in 2006. Today, he is worth $1.4 billion on the Forbes Real-Time Billionaires List.