2018 China City Business Appeal Index – Big Data Leads New Rankings

2018 China City Business Appeal Index – Big Data Leads New Rankings

The Rising Lab

Date: Sat, 04/28/2018 - 10:22 / source:Yicai
2018 China City Business Appeal Index–Big Data Leads New Rankings
2018 China City Business Appeal Index–Big Data Leads New Rankings

(Yicai Global) April 28 -- China’s eastern economic powerhouse of Shanghai has supplanted Beijing as the country’s top city for business, says a new report from Yicai Media Group's big data department The Rising Lab.

The reshuffle in the top order is the first time the first-tier city ranking has changed in three years.

Despite maintaining the highest future growth potential, Beijing fell to second due to a deterioration in urban population activity, the First-Tier City section of the 2018 China City Business Appeal Index states.

The first-tier city ranking is part of a wider study undertaken by The Rising Lab, comparing the business attractiveness of 338 cities across the country, and includes a ranking of China’s top 15 emerging "new first-tier" cities. The report used business and consumer behavioral data from 170 brands and 19 internet firms to compare five key evaluation categories, namely, concentration of commercial resources, city as a hub, urban residents' activity, lifestyle diversity, and future predictability. 

China’s fast-emerging tech hub of Shenzhen in southern Guangdong province has also beaten its provincial capital Guangzhou into third place in the list for the first time. Shenzhen’s gross domestic product surpassed CNY2 trillion (USD317 billion) last year and its rise is attributable to its pursuit of innovative sectors. It also led China’s patent applications by city nationally.

The capital of eastern China’s Sichuan province, Chengdu, held its position at the top of the list of the country’s top 15 new emerging first-tier cities, with Hangzhou, Chongqing, Wuhan and Suzhou rounding off the top five. Wuxi, a prosperous city in eastern Jiangsu province reentered the top 15 after missing the list last year, while Chongqing, Suzhou and Zhengzhou improved their rankings for the third year running. In contrast, northeastern cities continued their decline, with Shenyang falling one place and Dalian dropping to 21st place.

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Tianjin, Nanjing, Zhengzhou, Changsha, Shenyang, Qingdao, Ningbo, Dongguan and Wuxi made up the other cities in the top 15. 

The index applies principal component analysis through an original algorithm framework, in which an expert committee weights scores of the various criteria for the cities along with second-tier data with lower levels.

China’s cities are increasingly realizing that nurturing talent is key to their development. Early this year, new first-tier cities such as Nanjing, Hangzhou, Chengdu, Xi’an and Wuhan launched preferential policies to attract university graduates and professionals. These markets are fast becoming a battlefield for securing strong professionals and an element of rivalry is emerging between cities.

It is vital that diverse and open urban spaces co-exist with innovative talent. For all cities, the development strategy is not to pursue the hottest industrial directions but to attract high-caliber talents and resources and making full preparations before new opportunities arise. This is one such criterion greatly valued during the evaluation process of the cities.

Concentration of Commercial Resources

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The commercial multi-center cities of Hangzhou, Suzhou, and Wuhan have higher scores in the strength of urban commercial districts.

Hangzhou, capital of China’s southeastern Zhejiang province, ranked first among emerging first-tier cities for its core commercial district. Wulin Square and adjacent West Lake Hubin Shopping District and Qianjiang New City formed the core commercial area with the greatest strength in the leafy lakeside city.

The logic of store location in a commercial community is the most astute, prudent and feasible way to judge the quality of a city, as The Rising Lab identified when it introduced the concept of emerging first-tier cities five years ago. Now this method has been further upgraded.

Based on the degree of concentration of commercial resources, commercial space in a city falls into three categories: most extensive urban area with brand stores; urban commercial district formed with concentration of commercial resources effect; and commercial core district with most-densely located commercial brands. City size and scale of shopping district do not affect scores, and the commercial core index only takes the concentration effect of opening brand stores into account.

The Rising Lab still examines in this year's study how big brands’ choice of a city represents the recognition of its commercial atmosphere. Chengdu is still the favored city for famous labels in Southwest China. The total number of consumer brand stores in the Sichuan provincial capital has beaten out Guangzhou in southeastern Guangdong province and other emerging new first-tier cities for three consecutive years now. Chengdu’s near neighbor, the megacity of Chongqing, has also added 158 brand stores in the past year in the best growth momentum among such cities.

City as a Hub

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If one likens the relationship between cities to a network, then each city form one of its nodes. Cities with a strong radiative power send more goods, resources and talent to neighboring cities, while those with a weak radiating force usually act as receivers. The ability to transport resources, or the ability to act as a hub, is an important indicator of a city's competitiveness.

Transport is the material basis of a city’s network. For this dimension, we do not only consider intercity transport facilities data such as the number of a city’s high-speed rail stations, other cities accessible via direct flights and expressways, but also assess the city's ability to act as a hub in a transit network by using its intercity matrix of travel by air, rail and road.

The study has also considered the volume of packages a city sends and receives when calculating its logistics accessibility index this year, in addition to the number of logistics outlets. Jinhua, a prefecture-level city to which Yiwu -- China’s and possibly the world's largest wholesale market -- is subordinate, ranks second by the number of parcels sent, second only to Guangzhou, a first-tier city with a highly-developed logistics industry.

The commercial resource regional center index gauges the overall connection of commercial brands in one city to others in its region. Guangzhou and Shenzhen in southern China, Chengdu and Chongqing in southwestern China, and Shenyang and Dalian in its northeast have a relatively equal share in resource allocation in their respective regions, while Shanghai, Beijing, Wuhan and Xi'an hold an absolute edge in theirs.

Urban Residents' Activity 

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An ideal city model should consider the activity of its residents.

The consumption activity index is a basic indicator to gauge whether local urbanites are active or not. It also measures the purchasing power of a city’s residents and the municipality’s ability to simultaneously provide business services both online and offline.

The Jiangsu-Zhejiang-Shanghai region performs very well in this respect. Nine out of the top 10 cities in terms of per capita online shopping purchases are from this region, with Hangzhou taking the top spot, ahead of the four first-tier cities. Chengdu, Wuhan and Chongqing in central and western China are the new first-tier cities with highest daily film viewings as a large population provides sufficient potential customers for local movie markets.

Night activity index measures not only the vitality of a city at night, but also its potential to generate economic and social output. By region, southern and eastern China are the regions most active at night, while Suzhou, Hangzhou and Dongguan are the new first-tier cities most active in darkness.

The Vitality index measures a city’s desire to grow and develop, which indicates a positive state of life. Chengdu ranks first among the new first-tier cities in this aspect. City residents like sharing their travel experience on tourism platforms. They are quick to embrace the emerging bike-sharing service and are active users of such bikes.

Lifestyle Diversity

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Individual citizens choose their own lifestyles, but one can find tens of thousands of different life attitudes in a good city. They form the most important properties that make a city attractive -- diversity and inclusiveness.

Highly individualistic urban lifestyles depend on spaces, events and business amenities, so this year the study resurrected the algorithm framework for assessing lifestyle diversity, by using three indicators --public space diversity, recreation diversity and consumption diversity -- to gain more focused insights into how people feel about their everyday lives.

Restaurants, cafes, sports facilities, bookstores, museums and cinemas provide people with the ‘tertiary spaces’ to spend leisure time away from home. It is usually at these places that they meet (new) friends, exchange ideas and get new inspirations. These ‘outdoor’ spaces offer an important venue where meaningful social activities take place, away from home and office.

More people have taken up hobbies such as jogging, bodybuilding, reading, music and traveling, and data about these recreational activities can be used to assess the diversity of leisure options in a city.

We also examined the breadth of consumer goods and services available in the cities by analyzing box office takings, people’s willingness to pay for music app services, diversity of products listed on Taobao.com, consumers’ preferences regarding starred hotels and spending on tourism products. People in Chengdu, Nanjing and Hangzhou tend to spend more generously on music products and services, the data suggest.

Future Predictability

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Future predictability refers to the scope for flexible future personal development that a city offers. We looked at two factors that affect young people’s employment and their decision to live in a city: entrepreneur-friendliness and a good work environment with like-minded partners. However, they must weigh the upside against the downside (air pollution and congestion, for example) of living in big cities. In most cases, the former prevails.

Innovation is a decisive factor for determining the future flexibility of a city, and startups are one of the most innovative forces in this respect. Hangzhou and Chengdu outrank all other ‘new first-tier cities’ in entrepreneur-friendliness, because they have the largest number of startup incubators and the largest volume of funding among all Chinese cities except Beijing, Shanghai, Guangzhou and Shenzhen.

Higher education institutions are the biggest and most reliable source of human resources, but cities with the largest number of universities and colleges do not necessarily have the strongest supply of talent. Of all the new first-tier cities, Nanjing has the largest number of high-quality university graduates, but it has a low graduate retention rate. The city must increase its retention rate to raise its overall competitiveness.

The study also examined the attention that product information generates among urban consumers and membership and user statistics. A consistent increase in the number of rational and quality-conscious consumers indicates that the local market has greater potential for future upgrade. 

Our considerations also include local gross domestic product and population. The ability of cities at various levels to overcome their respective growth bottlenecks elevates peoples’ confidence in their choices and the cities’ future, factoring in differences in the existing sizes of the local economies and population.

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Keywords: first-tier cities, New First-Tier Cities, ranking, Business Attractiveness