On a Saturday afternoon, throngs of shoppers pile into Shapingba, a commercial hub in Chongqing, the megalopolis in southwestern China. Like most Chinese cities, Chongqing has been rebuilt as a sprawl of high rises and, lately, trendy U.S.-style commercial hubs such as the huge Capital Mall building above the Shapingba subway station into which a crush of mostly young punters file into to spend their wages on fashion and food.
New, well-run malls like Shapingba’s Capital Mall are also facilitating the rise of a new wave of restaurant chains. Among them, just off the escalators on the third floor of Capital Mall, is Taste of Fish, a hotpot restaurant specializing in spotted sliver carp. Prices range from RMB 17.8 per 500 grams for a whole fish or RMB 29.8 per 500 grams for a fish head. Diners pay RMB 5 per 500 grams for fish maw and RMB 128 per plate of fish lips.
Diners, used to the fiercely spicy food of this region of China, come to Taste of Fish for the location as much as for the hotpot. Having purchased a pair of luminous blue Adidas sports shoes downstairs, Qian Wang, a saleswoman at a private English language school, orders catfish at RMB 38 per 500 grams for a lunch with her mother. “You can spend a day in this mall, because afterwards we go to the basement supermarket and the hair salon,” she explained. Qian has on another occasion ordered wild carp priced RMB 58 per 500 grams. She’d consider two menu options for a special occasion: Chinese sturgeon at RMB 88 per 500 grams and tiger fish at RMB 298 per 500 grams. Taste of Fish prices are higher than those of older restaurants outside the mall, said Qian, “but the atmosphere is more modern.”
With bright colors and comfortable sofa-type seating, Taste of Fish clearly caters for a younger clientele. Established in 2002 the firm has expanded to two branches in Chongqing and five branches in Chengdu, the provincial capital of Sichuan province several hours away. “We combine traditional hotpot and the comforts demanded by modern people,” explained a company spokesman. The firm’s chief shareholder, Sichuan Yu Dao Finance Management Consultant Ltd., operates two other brands: La Yuan Su (a hotpot restaurant) and Starbucks-like Love Coffee.
The expansion of shopping mall chains built by developers such as Singapore-based CapitaLand (which has been building Capital Malls across China) and Chinese conglomerates like Wanda and COFCO has been facilitated by rising incomes, particularly in previously neglected regions like Chongqing. The city has over the past few years welcomed a plethora of manufacturing companies chasing lower wage workers, more plentiful in central regions than in wealthier coastal cities.
Another brand growing with the rollout of malls, Beijing New Spicy Way fish hotpot restaurant, has opened branches on the fifth floor of a new Capital Mall in Xizhimen. It also has an outlet in the EC Mall in Beijing’s Zhongguancun university area. “We have tried to open our branches in shopping malls or business buildings,” explained a company business development officer surnamed Wang. He points to New Spicy Way menu favorites as channel catfish (a hotpot priced at RMB 48 per 500 grams) as well as South American shrimp at RMB 4 each and Dalian Pearl abalone at RMB 28 each. Spicy Way also serves sea cucumber for RMB 48 each.
Other brands have opted for locations where there’s expats to act as early adapters. Lets Seafood, a Hong Kong-owned operation in the Nali Patio, charges western prices for a western-style menu. Menu options include a RMB 108 seafood pizza, RMB 168 Pacific Ocean (cod) burger and cooked cuttlefish (RMB 98) and salmon (RMB 88) main plates.
Mall developers like Capital Malls offer tenants consistency in design, marketing and tenant mix. They also make it easier by building their properties adjacent to subway lines and use well-developed research and ties to encourage retailers and F&B operators into malls in cities around China.
Mark Ho, head of Investment Research at Jones Lang LaSalle China, explained that rents vary across China’s emerging cities depending on supply of real estate as well as different land costs. Retail rents in the first level of malls around China varied between Chongqing (RMB 8,459 per square meter per year) to Shenyang (RMB 3,353), Tianjin (RMB 8,324) and Xiamen (RMB 7,037).
Real estate developers have been keen to tap the wages and spending power of cities like Chongqing that benefit from government eagerness to spread the wealth to the western regions. Ho says brands and developers have both been targeting so-called second and third tier cities such as Kunming in the southwest and Harbin in the northeast of the country. While 66 million Chinese live in households in these “lower tier” regions earn more than RMB 80,000 (around USD 5,000) per year, that figure will double to more than 125 million by 2015, creating scope for more consumption, and the spread of malls.
With China’s GDP (based on purchasing power parity, or PPP) set to almost double between 2011 and 2020, to USD 21 trillion, there will be more chances to grow. Among the food brands aiming even at China’s far-flung regions is Pizza Hut, which opened a branch this month in comparatively remote Xining, capital of northwesterly Qinghai province, bordering Tibet.
Spanning 330 square meters, the canteen-type outlet can cater for 98 customers at one time. Also, Chinese edible oil producer Hop Hing Group Holdings will open 90 new outlets of Yoshinoya and Dairy Queen in mainland China in 2012, having bought the rights to operate all outlets of the two brands in Beijing, Tianjin, Hebei, Liaoning and Inner Mongolia provinces.
Also expanding fast alongside China’s new wave of malls is Hong Kong-owned Food Republic, which offers value lunch options in local mall-office complexes such as Capital Mall properties and properties being developed in Beijing by Hong Kong developers such as the Swire Group. The something-for-everyone chain of basement level food courts offers Asian dishes from Cantonese dim sum to prawn-tofu stuffed dumplings to Japanese teppanyaki with diners paying with rechargeable cards.
Taste of Fish, meanwhile, is in expansion mode, looking for franchisees. The company spokesman explained: “You pay a deposit, and the company will send people to investigate whether the location is suitable for a hotpot restaurant. The company will be in charge of recruitment and training.”
