The “garden city”: is this the next opportunity for Suzhou Luxury?
Ancient gardens, gleaming skyscrapers and high-tech factories provide a bird’s eye view of Suzhou, a city just a 40-minute drive west of Shanghai. Nestled in Jiangsu Province, the city’s economy is more developed than many other provincial capitals, including Nanjing. In 2021, Suzhou’s GDP was ranked sixth in the country, just after Shanghai, Beijing, Shenzhen, Guangzhou and Chongqing.
The city has attracted many international luxury hotel giants to launch hotels. InterContinental Hotel Group, Marriott International Group, Accor Group and Hyatt Hotel Group are just a few names. There’s a W Hotel, Park Hyatt, and Hotel Indigo all opening in the last half-decade, with Capella Hotel and Ritz Carlton set to open in the coming years. Earlier this month, Marriott signed an agreement with Suzhou Jingyuan Hotel Management to launch the AC Hotels by Marriott brand in Greater China – a foray indicating confidence in the city’s tourism potential.
A well-developed economy and a rich, vibrant culture have drawn many graduates from lower-tier cities looking for a lifestyle somewhere between the high-tier bustle and sleepy hometown vibe. It has become a viable alternative to the rush of big cities while offering a better quality of life, nature and innovation. On top of that, wealthy individuals fuel the development of the city and fuel consumption. According to research launched by Hurun Report, there are 24,900 households with liquid assets valued at more than $1.39 million (RMB 10 million) in Suzhou, ranking it 12th among mainland cities.
These impressive economic figures testify to Suzhou’s remarkable transformation over the past two decades from an agricultural, manufacturing and export-oriented economy to an innovative, high-value-added and service-oriented economy. Here, Daily Jing examines the retail, textile and manufacturing, hospitality and tourism landscapes of Suzhou – revealing why the city is one of the most promising emerging markets for luxury companies.
Promising prospects for the luxury trade
Suzhou has well-developed textile supply chains, but recently it has also attracted property developers. Its current luxury retail landscape does not match the city’s strong economic growth. So far, only Meiluo mall is home to top luxury names such as Hermès, Louis Vuitton and Gucci. However, outdated facilities and inconvenient parking in the Old Town district discourage many local buyers. “I haven’t been to Meiluo for two years. It’s hard to park there and everything seems outdated. I prefer to drive 40 minutes to Shanghai if I want to do luxury shopping,” says Cecilia Xu, a 27-year-old fashion enthusiast born in Suzhou. Another landmark named Suzhou Center Plaza – a futuristic skyscraper – is home to high-end beauty boutiques like Dior and Chanel, as well as sports brands like Arc’teryx.
This untapped demand offers huge opportunities, and Singaporean property developer Yanlord is one of the most nimble in town. In 2021, the group announced the Yanlord Cangjie (仁恒仓街) project, which will renovate a historic building and launch a luxury complex comprising commercial, artistic and cultural spaces. Located in Gusu district, the project will be unveiled in mid-2023.
Along with urbanization and gentrification, the city with thousands of years of history has restored its ancient sites and merged them into modernized neighborhoods. Meanwhile, with picturesque gardens and waterfront architecture, Wu Regional Culture House has preserved its heritage well.
“Suzhou has always been a wealthy and populated area since ancient times,” said Sam Gu, Marketing Director of Yanlord Commercial Property Division. “And over the past 20 years, residents have accumulated considerable fortunes through the rapid development of second and third industries as well as advanced trade networks.” Along with this, the younger generations in Suzhou have a strong cultural awareness and pride, especially when it comes to the local Wu culture. “This demographic adds a unique allure to the city’s luxury market.”
Textile and manufacturing innovation
Suzhou plays a vital role in global apparel supply chains, thanks to a town named Shengze (盛泽) in Wujiang District, Suzhou. Since the Qing Dynasty, Shengze has been known for its silk production, which laid the foundation for the development of the textile industry. According official statisticsthere are 2,500 textile companies in the city and two of them are on the list of Fortune Global 500 companies.
This cluster phenomenon has facilitated the transformation of the local textile sector from sole proprietorships to businesses operating across the supply chain. “After the pandemic outbreak and the economic crisis, small and medium-sized enterprises are finding it harder to survive and are likely to be taken over by powers,” observes Lesley Yu of leading textile company Jiangsu Huajia Group and founder of Sanglou, a company domestic sleepwear. and lingerie line.
Rather than traditional textile production, today’s competitive supply chains leverage front-end technologies as well as creative branding. However, Yu notes that it is still difficult to attract talent in these fields to Suzhou. “Even if the economy [of Suzhou] is developed, residents’ exposure to arts and culture is still limited compared to first-tier cities. That’s why we chose to establish a creative headquarters in Shanghai to collaborate with designers.
However, the city authorities are trying to recruit talent and accelerate the sustainability of the textile industry. With the negative environmental impact of fashion production, the Suzhou government is encouraging local factories to take advantage of new technologies such as artificial intelligence to facilitate greener and recyclable production. In Yu’s company, for example, “our silk is completely organic and the carbon footprint can be traced via a carbon tag attached to the fabric.” Transparent business ecosystems like this have enabled factories and factories in Suzhou to become important suppliers for global fashion companies.
Future challenges and opportunities
Given the bright outlook for luxury retail in Suzhou, it’s not just Yanlord who has his eyes on the market. Huamao Group and Hong Kong Land Holdings will launch new real estate projects in major areas of the city in the coming years. Although the openings will provide more shopping destinations for consumers, establishments may be cautious in expanding offline due to pandemic uncertainties.
The luxury retail developed in Shanghai has been another obstacle for Suzhou. As Xu mentioned, many people in Suzhou tend to shop in Shanghai for better choices and experiences. To counter this, Gu suggests that commercial projects should take advantage of local culture to highlight their differences from Shanghai malls, through partnering with local and global brands, which is exactly what Yanlord Cangjie has planned.
In addition to local buyers, domestic travelers cannot be overlooked. With travel restrictions imposed by China, short-term trips have become a trend and Suzhou is one of the most popular destinations. According official data, the number of visitors to Suzhou during the Golden Week holiday (October 1-7) reached 5.53 million. From rising tourism and economic power to real estate development and supporting facilities, is Suzhou proving it’s ready for luxury brands to double their presence in the city?