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Dalian, Snapshot of a Typical Chinese City
By Jack Marr
If reports of the astonishing economic
growth and progress in Shanghai have colored your picture of city
life in the People’s Republic of China, it’s time to
flip channels for a moment.
Just as visitors to Los Angeles or New York City may return to their homelands with an imperfect impression of U.S. cities, knowledge of Shanghai’s consumer market may not carry over to other important Chinese cities.
A case in point is the contrast between Shanghai and Dalian, an important port city of 5.4 million in northeast China.
Both are, by Chinese standards, affluent centers of commerce. Yet a closer look reveals many notable differences between the two markets–differences in lifestyles, income, shopping habits, and food preferences.
Far Apart in Geography, Lifestyles
As the "Gateway to the Northeast," the port city of Dalian is a major "second-tier" city, a transportation hub in northeast China and a center for food distribution. Originally built up with Japanese and Russian capital early in the century, Dalian now serves as a center of hi-tech manufacturing as well as a major port of re-export.
Admittedly, it is no Shanghai. It’s a fact of Chinese life that people in Shanghai make more money than those who live elsewhere. According to a 1999 survey, about 30 percent of Dalian residents earn more than 1,600 RMB (about $193) a month. Yet Dalianese household incomes are still well above both the nationwide average and the urban average.
It’s worth remembering that living expenses in Dalian are about 20 percent less than those of Shanghai. There are other trade-offs, too: citizens live in larger dwellings and often breathe cleaner air, yet can still afford many luxury items. However, imported food prices are often the same as Shanghai’s--or even higher--owing to the strictness of Dalian Port authorities and the cost of shipping the considerable distance from the southerly Hong Kong/ Guangdong area.
Who Does Dalian’s Shopping?
Where?
There’s an interesting demographic contrast in the age breakdowns of food purchasers. Shanghai’s decision makers are markedly older, while Dalian shoppers are more likely to be in the 20- to 40-year-old range.
In both cities, women seem to play a much more important role in food purchasing decisions than men. However, in Dalian, many men take pride in being the "cooks" of the family and, although not making purchases themselves, may influence the course of these decisions.
In Dalian, not only the retail venue format but consumer mentality has some ground to cover before catching up with Shanghai.
For one thing, there are vastly fewer modern supermarkets in Dalian than in Shanghai. The first one opened in 1997 in the Dalian Friendship Store, and was followed by Malaysia-invested Parkson, in addition to a scattering of local supermarkets such as Aihua.
Some authorities believe that two or three hypermarkets, which retail a vast range of food products, represent the wave of the future, rather than smaller supermarkets. The rationale is pegged to mobility. In second tier cities such as Dalian, it appears feasible for consumers to make a trip across town to save money, whereas in congested Shanghai, the effort would seldom be worth it.
But supermarkets are not the only Western-style shopping option. Seven percent of Dalianese surveyed now report shopping in convenience stores. Most were between the ages of 26 and 45.
Unlike those in Shanghai, Dalian convenience stores have fixed operating hours and offer very limited choices in cold and convenience products. The two leading chains are locally owned; as larger players such as 7-Eleven enter the market, the competition and product ranges are sure to expand.
On other fronts, Dalian reflects strikingly similar shopping habits to Shanghai. Farmers’ markets remain the most popular venue for purchasing meat, fish and fresh fruit and vegetables. On average, Dalian consumers visit local street vendors known as wet markets about 19 times a month.
Following the behest of a popular mayor, Dalian’s residential farmers’ markets were ordered to construct large, overhead shelters to protect products and people from the elements, and to sell their produce in a more orderly fashion. The result: improved market conditions that are considered more sanitary than those of other Chinese cities.
What’s for Dinner in Dalian?
In supermarkets, basic ingredients,
bread, instant noodles, and beverages sell particularly well. In
frozen and chilled foods, however, Dalian lags behind Shanghai in
refrigeration capacity--a situation that would be ripe for
foreign investment, were it not for the recent Asian currency
crisis.
Market research suggests that 22 percent of Dalianese have previously bought fresh vegetables in supermarkets, compared to 33 percent of Shanghai shoppers. Furthermore, only 29 percent of Dalianese report that they expect to do so in the future.
As for meat, fish and fowl, remember that pork is the ubiquitous meat in Chinese cuisine.
However, Dalian’s potential for U.S. exporters is probably strongest in seafood, a traditional favorite in a region that looks seaward. Seafood now accounts for 18 percent of Dalian’s total food purchasing expenses. Sea fish, shrimp, prawns and live river fish are particularly popular among high-income consumers.
Another strong future contender is wine. Dalian’s interest in wine has trended upward recently, although only a mere 14 percent of consumers identify themselves as wine drinkers. Purchases are heavily income-dependent. Thus far, domestic red wine has a substantial lead in market share in Dalian as well as Shanghai.
Consumers typically drink wine at home.
This is believed to reflect the lower incidence of wine
distribution in Dalian’s hotels, restaurants and bars which,
compared to Shanghai, remain relatively small.
Opportunities for U.S. wine exporters appear to loom large. Already, large U.S. wineries are beginning to develop business partnerships in China and are representing a number of smaller vintners who lack the resources to develop export markets alone.
Hometown, PRC
U.S. exporters should by no means discount Dalian simply because it lacks the pyrotechnic allure of Shanghai, the "New York of China."
If you’re looking to expand operations in China or hoping to profit from developing trends, a smaller city like Dalian may offer a less competitive environment than Shanghai, both in terms of competing products and the costs of getting started.
This article is based on GAIN Report CH8816, "Dalian Consumer Food Purchasing Habits," which is available online by searching http://www.fas.usda.gov
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The author is a former Marketing Specialist with the ATO
Shanghai. ATO Shanghai can be reached via e-mail at: atos@public.sta.net.cn
Pardon Me, Sir; You Don’t Own a Can Opener?
In Dalian, can opener ownership–like car ownership--cannot be taken for granted. A mere 33 percent of consumers possess such a gizmo.
This is simply a reflection of canned food’s relative unimportance in China. Foods in cans are widely regarded as less desirable than their high-grade fresh equivalents.
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