(Yicai Global) Oct. 20 -- China has 15 emerging new first-tier cities, according to research by The Rising Lab, the big data project of Yicai Media Group, owner of Yicai Global.
The cities of Chengdu, Hangzhou, Wuhan, Tianjin, Nanjing, Chongqing, Xi’an, Changsha, Qingdao, Shenyang, Dalian, Xiamen, Suzhou, Ningbo, and Wuxi have joined the elevated ranks of Beijing, Shanghai, Guangzhou, and Shenzhen.
The rapid growth in Chinese people’s income as well as their willingness to spend on eating out, fashion and entertainment is transforming cities in the world’s second-largest economy, and has led to the need to re-classify many.
Based on the store distribution of 160 brands and its own Commercial Database of Emerging New First-Tier Cities, which combines the user data of 14 Internet companies, The Rising Lab re-evaluated the business attractiveness of 338 Chinese cities and re-graded them according to five indexes: concentration of commercial resources; the city as a hub; urban residents’ activity; life diversity of life; and future predictability.
Concentration of Commercial Resources
Chongqing heads the concentration of commercial resources index, indicating that commercial resources are flowing from eastern areas to regions inland.
The index of brand stores refers to the number of brand stores in the cities. For a city to be profitable, it needs to encompass various types of brands covering automobiles, cosmetics, banks, residential properties, shopping malls and supermarkets. The index of brands diversity reflects the variety of brands present.
Companies prefer to tap into markets where there is assured demand. Such detailed data helps them to make better decisions.
The City as a Hub
The city as a hub index rates the connectivity of the cities. It includes the number of flights, punctuality rates, high-speed train schedules and destinations, the accessibility of logistics and express services and the ratio of areas with business districts.
The higher the city as a hub score, the easier it is for a city to connect with its surrounding areas and the more likely it is to become a central city in that region. The indexes of the city as a hub and the concentration of commercial resources are closely related as a genuine metropolis can mutually promote its connectivity and the concentration of its industries.
Several cities in central and western China, including Chengdu, Chongqing, Xi’an and Wuhan, exhibit strong regional advantages and also serve as hub cities.
Decathlon Group, one of the world’s largest goods retailers, owned 37 stores in China in 2011. By the end of last year, that figure had grown to 166. Snorkeling masks and ski goggles in the city of Chengdu have been off the scale the last two years despite the fact that the city cannot cater to either sport.
“These are vacation sports and Chengdu Shuangliu Airport bears non-stop flights to famous snorkeling resorts like Mauritius,” said Mr. Sun Yu, vice president of Decathlon’s Greater China business. The airport operates 53 international flights, behind onlyShanghai, Beijing and Guangzhou, according to data from Variflight.
Urban Residents’ Activity
Hangzhou, the capital of China’s eastern Zhejiang province, topped this index, scoring higher even than Shanghai. The city used to be well known for its leisurely lifestyle, but it is becoming more of a commercial hub as big firms such as Alibaba Group Holdings Ltd. set up there.
People are essential to urban development. The urban residents’ activity index looks at the penetration of ride-hailing apps such as Didi Chuxing, the length of time people use mobile devices, subway accessibility, purchases from online retail website JD.com and the number of active users on LinkedIn.
The longer urban residents spend on their phones, the longer the city stays awake. This data attempts to show the state of a city’s vitality, where people keep moving, talking and seeking change.
Diversity of Life
Better standards of living mean higher levels of spending by urban consumers. The diversity of life index is calculated using popular mobile entertainment apps in China, including those for sports, movies, and travel.
Xiamen, a coastal city in the southeastern province of Fujian, heads the diversity of life index. The city has become a leading center for live entertainment.
The high cost of living in cities such as Shanghai and Beijing affects diversity. Due to rising rents and the outflow of human capital, an increasing number of people are moving to less costly cities such as Xiamen and Zhengzhou.
A city’s potential depends on the nature of its consumers. Changsha, capital of Hunan province in south-central China, tops the future predictability index. The greater the level of consumption, the faster is the upgrade of services and products and the earlier adoption of new products and new brands by consumers.
The number of first-tier cities is limited. As more advanced cities such as Beijing and Shanghai change, their development improves. If less-developed cities lag behind, they will fall out of favor with businesses and it will become more difficult for them to catch up. The clock is ticking for low-ranking provincial capitals, major second-tier cities, and even first-tier cities.