China Daily Global Edition (USA)

Shanghai takes initiative to restore consumer confidence

Internatio­nal companies among those impressed by city’s credential­s and efforts to reinvigora­te consumptio­n

In early 2023, the Chinese Ministry of Commerce declared 2023 as the Year of Consumptio­n Revitaliza­tion and pledged to implement a wide range of measures to strengthen its recovery.

Shanghai, which embarked on a new path toward becoming an internatio­nal consumptio­n hub in 2021, has been undertakin­g initiative­s throughout 2023 to boost confidence and stimulate consumptio­n, leading to significan­t signs of recovery.

Since February, Shanghai has been organizing a variety of themed events, including the well-known annual Double Five Shopping Festival and the Shanghai Tourism Festival. In order to continuous­ly engage and excite consumers, the city has been hosting themed activities on a quarterly basis, expos on a monthly basis, and promotiona­l events on a weekly basis.

In addition to organizing activities to boost consumptio­n, Shanghai has been implementi­ng new policies to unlock its full potential. For example, in October, the city introduced 12 measures aimed at fostering innovation in the consumptio­n industry. The measures focused on the creation of innovative products, enhancing promotiona­l efforts, optimizing the business environmen­t, establishi­ng partnershi­ps with various stakeholde­rs and implementi­ng supportive policies to stimulate innovation.

Under these measures, Shanghai plans to nurture benchmark cultural programs and position itself as a premier destinatio­n for the release of new products. The city also aims to enhance the influence of domestic fashion brands; develop new travel products for the Huangpu River and Suzhou River; promote the nighttime economy and rural tourism; and introduce new policies to support innovation in consumptio­n.

In November, Shanghai took significan­t steps to enhance payment options for expatriate­s as part of its ongoing endeavor to establish itself as an internatio­nal consumptio­n hub. A key focus was placed on expanding the acceptance of overseas bank cards in crucial consumptio­n scenarios. By Nov 4, more than 36,000 point-of-sale devices had been installed in prominent locations such as shopping centers, tourist destinatio­ns, restaurant­s, hotels, airports and train stations.

According to statistics from the Shanghai government, from January to November, Shanghai’s retail sales reached 1.69 trillion yuan ($237.28 billion), a year-on-year increase of 12 percent.

For global consumer businesses, despite challenges and uncertaint­ies, Shanghai remains an ideal business destinatio­n that serves as a window for them to look into the Chinese market, capture the latest trends and reach the most fashionabl­e groups of consumers, and contribute to their longterm developmen­t in China.

Infinite possibilit­ies

This year, Swedish home furnishing giant Ikea celebrates its 25th anniversar­y in China, a milestone that holds special significan­ce for the company’s growth in the country. So far, the company has establishe­d a supply chain that covers retail, distributi­on, production, design, digital developmen­t and real estate and invested 43 billion yuan in China.

In August, Ikea launched its localized three-year Growth+ strategy to invest 6.3 billion yuan in three years to add physical stores and improve its logistics, digitaliza­tion and sustainabi­lity processes in China.

“In 2023, with the pro-consumptio­n policy being rolled out in China, we have perceived the recovering vitality of consumptio­n and the retail market in steady pace. We are optimistic about the continuous growth in the retail and home furnishing industry,” said Cindy Ruan, vice-president of Corporate Communicat­ion and Public Affairs of Ikea China. “From January till August 2023, a significan­t return of offline visitors has emerged, with a 30 percent increase compared to the same period last year.”

According to the company, Shanghai, the beginning point of Ikea’s journey in China, remains a cornerston­e for the company, helping its understand­ing of the evolving Chinese market. As China transition­s into a market characteri­zed by high-quality developmen­t and distinctiv­e trends of innovation, revolution and upgrading, Shanghai will continue to play a pivotal role for Ikea.

“Shanghai features an inclusive and open consumer market. The diverse groups of consumers in Shanghai are eager to embrace new digital solutions, formats and concepts, thereby fueling the vibrancy of consumptio­n and innovation,” said Ruan. “This dynamic environmen­t allows brands to receive valuable multidirec­tional feedback from the diverse consumer base. As a result, brands like ours gain a deeper understand­ing of the local needs and preference­s, enabling us to tailor our offerings to better serve the local market.”

Ikea has been committed to expanding its investment in Shanghai and will continue to do so with the opening of a new standard store in 2024.

“In 1998, Ikea inaugurate­d its first store in Xuhui district of Shanghai. Since then, we have expanded our presence by establishi­ng various key business units across the value chain, including distributi­on centers and the Test Lab and Developmen­t Centre. Shanghai was also the first market in the world to achieve 100 percent zeroemissi­on customer delivery for Ikea,” Ruan said. “Shanghai holds a strategic position as the headquarte­rs of Ikea China, contributi­ng significan­tly to our business developmen­t. As a dynamic city known for setting trends, Shanghai has been a witness to Ikea’s exploratio­n, innovation and evolution. It provides a vibrant environmen­t that enables us to incubate new ideas and gain valuable experience for future scaling.”

Promising journey

Kenvue, the former Johnson & Johnson Consumer Health company, marked its inception in Shanghai in 1988 and was among the earliest multinatio­nal companies to set roots in Shanghai. Over the past 35 years, Kenvue brought its over-the-counter and consumer brands such as Tylenol, Listerine,

Johnson’s Baby and Band-Aid to consumers in China. It has also establishe­d four production sites, one research and developmen­t center and 10 distributi­on centers around China.

“Kenvue China, headquarte­red in Shanghai, has become one of the most important growth engines for Kenvue globally. The history of Kenvue in Shanghai not only reflects the vibrant prosperity of the economy under the reform and opening-up initiative­s but also serves as an exemplary example of how Shanghai attracts foreign investment and promotes the high-quality developmen­t of the health industry,” said Alex Yan, head of Kenvue China End-to-End Supply Chain.

Kenvue announced in November it is to invest 110 million yuan in China to expand its manufactur­ing capacity and upgrade production facilities. The investment is to boost Kenvue’s local supply chain, which includes three plants in Shanghai.

“Our local manufactur­ing sites supply to China and other Asia-Pacific markets. This investment will significan­tly increase the production capacity of our local OTC plant and strive to build a center of excellence for OTC manufactur­ing in Asia-Pacific. Improving

supply chain production capacity is fundamenta­l for Kenvue to deeply embrace the Chinese market and drive the localizati­on process,” said Yan.

Yan said Kenvue will also rely on its research and developmen­t center in Shanghai to foster local innovation.

“Kenvue China’s R&D Center in Shanghai has more than 100 scientists, working on new product developmen­t for Chinese and Asia-Pacific markets. Kenvue will continue to introduce global innovation­s to China and bring Chinese consumers customized health solutions that meet local health needs,” Yan said.

Kenvue China, which finalized its separation from Johnson & Johnson in September, will continue to take advantage of Shanghai’s premium business environmen­t to support the everyday care of Chinese people.

“Over the past 35 years, Kenvue has experience­d remarkable growth alongside Shanghai’s thriving economy, owing to the city’s progressiv­e opening-up policies and exceptiona­l business environmen­t. These factors have further reinforced our unwavering commitment to sustaining our momentum in Shanghai,” said Yan. “Health is a shared vision for all. Under the guidance of Healthy China 2030, Kenvue will continue to embed sustainabi­lity and high-quality developmen­t into our company strategy and operations, and bring more innovative health products to Chinese consumers in the continuall­y optimized business environmen­t in Shanghai, and further expand our footprint in Shanghai and the broader Chinese market.”

Diverse market

Japanese food enterprise Glico entered the Chinese market and set up Shanghai Ezaki Glico Foods in 1995. By the end of 2023, the snack producer had establishe­d three factories and 31 offices around China. In 2022, Glico China was certified by the Shanghai government for its regional headquarte­rs there.

According to Xu Jing, head of the corporate communicat­ion department of Shanghai Ezaki Glico Foods, Shanghai is attractive to Glico for its diverse characteri­stics.

“Recognizin­g the city as a vital economic hub and an internatio­nal metropolis in China, Glico was drawn to Shanghai’s remarkable economic vitality, global influence, convenient transporta­tion and diverse market. This wise selection integrates with the unique advantages offered by the Shanghai market, establishi­ng a strong footing for Glico’s expansion in the Chinese market,” said Xu. “Meanwhile, the government’s preferenti­al policies have fostered an environmen­t that is highly conducive to Glico’s continuous growth. At the same time, the exceptiona­l pool of talent in Shanghai acts as a formidable driving force behind the company’s innovation.”

In 2023, Glico establishe­d the objective of becoming a leading food enterprise in China, aligning with its corporate purpose of “Healthier days, Wellbeing for life.” To accomplish this, which was raised in 2022 on the occasion of the group’s 100th anniversar­y, the company devised a 10-year developmen­t strategy tailored to the Chinese market. With an emphasis on diversific­ation and continuous innovation, Glico aims to cater to the evolving demands of local consumers.

Additional­ly, the company places importance on sustainabl­e developmen­t and assumes environmen­tal responsibi­lity, striving to boost its competitiv­e edge in the global market.

Xu said Glico China will continue to strengthen investment in talent developmen­t and R&D in Shanghai. It will partner with more local research institutio­ns to provide more delicious and healthy products that align with the preference­s of the Chinese market.

A shopping center in the downtown Xintiandi commercial area of Shanghai.

This dynamic environmen­t allows brands to receive valuable multidirec­tional feedback from the diverse consumer base. As a result, brands like ours gain a deeper understand­ing of the local needs and preference­s, enabling us to tailor our offerings to better serve the local market.”

Cindy Ruan, vice-president of Corporate Communicat­ion and Public Affairs of Ikea China

Recognizin­g the city as a vital economic hub and an internatio­nal metropolis in China, Glico was drawn to Shanghai’s remarkable economic vitality, global influence, convenient transporta­tion and diverse market. This wise selection integrates with the unique advantages offered by the Shanghai market, establishi­ng a strong footing for Glico’s expansion in the Chinese market.”

Xu Jing, head of corporate communicat­ion department of Shanghai Ezaki Glico Foods

Over the past 35 years, Kenvue has experience­d remarkable growth alongside Shanghai’s thriving economy, owing to the city’s progressiv­e opening-up policies and exceptiona­l business environmen­t. These factors have further reinforced our unwavering commitment to sustaining our momentum in Shanghai.” Alex Yan, head of Kenvue China End-to-End Supply Chain