Commerce has played a key role in Shanghai's development
and prosperity. Since the city became a trading port in 1843, commerce
has expanded fast here, attracting tens of thousands of merchants.
In the 1930s, Shanghai was already the trading centre of the Fast
East. After the founding of the People's Republic in 1949, especially
over the past 20 years, Shanghai has witnessed unprecedented growth
of its commerce, which is a driving force behind the city's economic
Shanghai's retail sales of consumer goods have been
growing by an average of 15% a year since 1992. The city achieved
a high economic growth and low inflation in 1997 and its retail
market posted a total sales of 132.5 billion yuan (US$16 billion),
the biggest among all mainland cities and a surge of 16% from 1996,
which was 5 percentage points higher than the country's average
Value in GDP
As the commercial sector keeps growing each year, its
contribution to the city's GDP also increases each year. In 1997,
it generated 38.11 billion yuan (US$4.6 billion) or 11.4% of the
city's GDP, 3.68 percentage points higher than in 1992.
The gross business space of local commercial enterprises
increased by 6.59 million square metres between 1992 and 1996. In
1997 the figure reached 1O.06 million square metres, 2.6 times the
1992 figure. Per capita shopping space was 0.76 square metre, equal
to that of a developed country. Shop buildings with a floor space
of over 10,000 square metres each increased from four before 1992
to 66. Four major shopping streets and four shopping hubs have emerged
The work force employed by the city's retail and catering
businesses has been growing each year. By the end of 1997, the commercial
sector had employed 1.5 million people, a net increase of 570,000
people compared with 1992. The sector absorbs about 100,000 new
workers every year.
Big changes have occurred in local people's diet, clothing
and spending habit as a result of the city's fast. economic growth
and risiing living standards. Shanghai residents now spend less
of their income on food but more on other consumer goods and recreation.
While the spending on cereals has dropped, the spending on non-staple
food and snacks has increased. People also spend more on ready-made
clothes than on fabrics for tailored clothes. Meanwhile, the replacement
rate of home appliances gets faster than before.
The Shanghai Commission of Commerce oversees the development
of the city's commercial and catering trade. Its main functions
- Devising local policies and regulations on commerce.
- Supporting the development of markets
- Setting plans for the supply and reserve of commodities, especially
- Acting as a coordinator in the reform of Stateowned commercial
- Assessing the fixed assets and foreign investment of commercial
- Providing guidance on the development of commerce in urban and
rural districts of Shanghai
- Designing and implementing job training programs
Shanghai is trying hard to push its commercial sector
to the world advanced level. The sector is expected to yield about
13% of the city's GDP by the end of this century; its retail and
wholesale businesses are expected to reach 180 billion yuan (US$21.7
billion) and 220 billion yuan (US$26.5 billion) a years, respectively;
and its retail space will total 13 million square metres.
Rapid progress has been made by the city's retail and
catering sectors since 1990. In 1997, the number of retail outlets
in Shanghai topped 163,000, employing more than 949,000 people.
The city has developed a multilevel retail network that comprises
major shopping districts, local shopping centres, convenience stores
and specialized streets.
Major Shopping Districts
A group of large shopping districts have emerged in
Shanghai in recent years, including Nanjing Road, Huaihai Road,
Xizang Road, Sichuan Road N., Yuyuan shopping area, Xujiahui shopping
area, the Kerry Everbright City near the Shanghai Railway Station
and the New Shanghai Commercial Centre in Pudong. These shopping
districts teem with people during the day and are a symbol of prosperity
at night with neon lights.
Local Shopping Centres
Currently, there are 32 local shopping centres in 14
urban districts and five suburban counties. The Caojiadu and Wujiaochang
shopping centres cover a large area and have well-developed retail
Shanghai has 65 residential areas, which accommodated
a quarter of the city's urban population. Retail outlets in these
residential areas have a total space of 1.2 million square metres.
They were built to serve the needs of local residents.
Shanghai has more than 30 specialized streets, such
as the Hardware Street of Beijing Road E., the Cultural Street of
Fuzhou Road, the Auto Parts Street Of Weihai Road, the Garment Street
of Shimenyi Road, the Food Streets of Zhapu Road and Yunnan Road,
and the Antiques Street of Tongtai Road.
Through the continuing reform of the city's commercial
sector, an efficient and standard wholesale system has taken shape
in Shanghai. The number of registered wholesalers exceeded 24,000
in 1997, employing more than 434,OOO people. Their gross business
turnover stood at 148 billion yuan (US$17.8 billion), a 1O.1% rise
from 1996. The wholesale of industrial goods reached 14.46 billion
yuan (US$t.74 billion), a surge of 35% over 1996.
Wholesale of Industrial Goods
Shanghai's wholesale companies are actively exploring
new marketing strategies, such as finding general agents, promoting
brand names, leasing warehouse facilities, looking for business
partners, providing brokerage service to manufacturers suffering
material shortages, seeking co-operation with foreign multinationals,
and opening membership wholesale centres and warehouse-style shopping
malls. They also set up a number of distribution centres to serve
local supermarkets and chain stores. Small wholesalers were merged
to form large companies.
Wholesale of Farm Produce
Since 1985 when the commercial sector began to practice
market economy dramatic changes have taken place in the distribution
of farm goods. A diversified marketing network was established.
Shanghai currently has 329 wholesale markets for farm produce, with
a total business area of 788,000 square metres. These markets reported
a combined wholesale volume of 2.6 million tons of agricultural
products in 1997, representing 44% of the all the farm goods sold
Catering and Services
There are 45,000 restaurants and food shops in Shanghai
with more than 300,000 employees. In recent years, these catering
businesses have made efforts to serve different groups of consumers
and introduced standardization and brand strategy to improve their
services. Chinese restaurants, fast food chains, hotel restaurants
and food streets have all flourished.
Chinese restaurants in Shanghai serve a variety of regional
cuisines -- Peking, Cantonese, Sichuan, Hunan, Huaiyang and Shanghainese
Besides the long-established Shanghai Old Restaurant and the Lao
Zheng Xing Restaurant, a number of new eateries have appeared in
re-cent years. Mei Long Zheng, Lu Yang Chun, Lu Bo Long, and Xing
Hua Luo were rated top-class restaurants in China in 1997.
The city has made active efforts to develop snack restaurants
for local residents. Between 1996 and 1997, 256 snack shops were
opened around Shanghai and 1OO fast food vans were put on the street.
This basically solved the problem of inadequate supply of breakfast
food. Meanwhile, the city began the "Public Kitchent"
project to supply ready-to-cook dishes, dumplings and other fast
Shanghai's hotel industry has developed rapidly in recent
years. Four- and five-star hotels owned by the city's commercial
enterprises include the New Asia Tomson Hotel, Yangtze New World
Hotels Hotel Sofitel Hyland, Jianguo Hotel, New Asia Great Wall
Hotel and New Asia Plaza Hotel.
Shanghai has a well-developed network of barbershops,
laundry shops, photo stutlios, hostels, public baths, printing shops
and repair shops.
Rapid economic development and rising living standards
have brought changes to Shanghaits commerce. The Lianhua Supermarket
Co, founded in 1991, was the first of chain stores in Shanghai.
By the end of 1997, the number of local chain stores had increased
to 2,600 with combined sales approaching 14 billion yuan (US$1.7
billion). The chain stores have become a major force in the city's
commerce. They include supermarkets, convenience stores, fast food
restaurants and exclusive shops.
Shanghai has 14 supermarket chains with over 900 outlets
and combined sales of 1O billion yuan (US$1.2 billion) in 1997.
These companies have expanded their operation through across-region
acquisitions, mergers, joint investment and franchise. A management
system for chain store operations has been established. The Hualian,
Lianhua and Nonggongshang became the country's top three supermarket
Shanghai Hualian Supermarket Company is a subsidiary of Shanghai
Hualian Corp. It had 248 outlets in 1997 and some of which are in
Jiangsu, Zhejiang and Anhui provinces. Its business turnover approached
2 billion yuan (US$240 million) in 1997. The company's head office
and goods distribution centre have introduced computerized management
and they offer around-clock goods delivery.
Shanghai Lianhua Supermarket Co Ltd was established in May 1991.
In September of the same year, it opened its flagship store in QuYang
Residential Area. By the end of 1997, the company had opened 230
outlets in Shanghai and 30 other cities in Jiangsu, Zhejiang and
Anhui provinces. Its annual sales topped 2 billion yuan (US$240
million). The company has advanced chain store management a computer
centre, a staff-training centre and a large goods distribution centre.
Shanghai NonggongShang Supermarket Corp was established in late
1994 to serve the needs of ordinary citizens. The company now has
nearly 60 outlet and achieved a business turnover of almost 1 billion
yuan (US$t20 million) in 1997.
Most of the convenience stores in Shanghai evolved from
small grocery stores. There are more than 1,000 convenience stores
around the city with total sales reaching 1.75 billion yuan (US$211
million) in 1997. Major chain operations include Hongliang, Jieqiang
and Kedi Food. Lawson and Basics are foreign-funded convenience
stores in the city.
Invested by the Shanghai Qilin Enterprise Company and managed by
the Hong Kong Basics Inc, the Basics convenience stores provide
all kinds of daily necessities, instant food, medicine, periodicals
and other services. The number of Basics stores has exceeded 50
in Shanghai. They are open 24 hours a day all year round.
Shanghai Hualian Lawson Co Ltd is a joint venture between the Shanghai
Hualian Corp and the Lawson Co Ltd of Japan. It had opened 30 outlets
by the end of 1997. All Lawson stores are open 24 hours a day. The
company has its own goods distribution centre and a food processing
centre that supplies Japanese lunch boxes, sushi, sandwiches and
bread to its outlets.
Fast Food Restaurants
Shanghai is witnessing a growing competition between
Chinese and Western fast food companies. The city now has 1O popular
fast food chains with 240 outlets. Among the Chinese fast food chains
are Sun Ya, Ronghua Chicken, Ni Wo Ta, Duo Wang and Magnolia. Among
the Western fast food restaurants are KFC, McDonalds and Pizza Hut.
Founded in 1989, the Shanghai KFC Co Ltd is a joint venture between
the Shanghai New Asia Corp and the PepsiCo Inc of the United States.
It has 38 outlets throughout the city and has won several top awards
at the annual meetings of PepsiCo Inc. The KFC store at People's
Park broke the world record three times in daily sales by a single
restaurant. On June 1, 1997, the KFC store in Xujiahui broke the
world record held by the People's Park store.
Ni Wo Ta is a 24-hour fast food restaurant that specializes in Shanghai-style
breakfast and snacks. Ni Wo Ta now has 21 outlets and a 1,200-square-metre
food-processing factory. It is one of the largest restaurant chains
With the development of a socialist market economy, consumer goods
have increased both in quantity and variety. Stores that sell one
kind or one brand of products have flourished. There are more than
200 exclusive shops in Shanghai selling anything from food, suit,
underwear, shirts, and wool sweaters to household appliances.
The Shanghai Croissant Food Co Ltd is a joint venture between the
Shanghai Home Appliances Corp and the Bright Vaney Co Ltd of Singapore.
Founded in July 1993, Croissant now has 16 shops in the city and
a few outlets in Beijing, Hangzhou and other Chinese cities. Its
main products are puffy pastry, bums, bread, cakes and cookies.
Shanghai's commercial enterprises have diversified their
businesses by investing in more than 20 manufacturing and processing
sectors, such as grain and edible oil processing, butchery, ashery5
brewery, confectionery, food processing, garment making, pharmaceutical
and machinery manufacturing. There were 876 factories owned by local
commercial enterprises in 1997 with a combined output value of 1O.18
billion yuan (US$1.2 billion).
In recent years9 these factories have concentrated on improving
the quality and packaging of their products and increased the output
of refined cereals and cooking oil, quality garments, jewelry, health
products, ready-to-cook dishes, condiments, pastry and confections.
Shanghai's food industry achieved an output value of
18.45 billion yuan (US$2.28 billion) in 1997. Factories owned by
local commercial enterprises contributed about 7.4 billion yuan
(US$894 million) or 40.4% of the total. In 1997, the city launched
the so-called "Kitchen Project" spurring factories owned
by commercial firms to develop more nutritious, convenient and inexpensive
Shanghai has 45 garment factories owned by commercial
enterprises, include 15 shoes and hats producers. Many of these
factories hold old brands. The Dragon & Phoenix qipao (a tight-fitting
gown for women), for example, is made with traditional skills and
modern techniques. The Pengjie women's suits, the Wing's fashion
clothes, and suits under the brand of Baromon, Hengshen and Qifa
are all popular products because of their fine fabrics, good tailoring
and superb craftsmanship. The Lantang-brand women's shoes are famous
for their fine leather, stylish design and delicate workmanship.
Shanghai has witnessed a rapid growth of consumer markets
in recent years. By the end of 1997 the city had established 1,043
markets and malls, which deal in all kinds of consumer goods and
combine shopping with dining, entertainment and recreation. Some
of the markets specialize in the sale of brand-name products and
some deal in second-hand goods and warehouse clearance products.
There are three salient features in the development of consumer
markets: 1.) Their business space keeps growing with the largest
market being over 1OO,OOO square metres in size; 2.) Markets with
professional management are thriving; 3.) Market investors have
become more diversified, coming from various trades, regions and
ownership backgrounds. This boosted the development of Shanghai's
Markets for Industrial Goods
Shanghai has a multi-level marketing system for manufactured
goods. The city has 194 markets specializing in daily necessities,
stationery, textiles, clothes and shoes, home decoration materials,
electric appliances, and furniture. Manufactured goods worth 7.66
billion yuan (US$925 minion) were sold in Shanghai in 1997.
Markets for Farm Produce
Shanghai has 329 farm goods markets with a combined
business area of 788,000 square metres and an annual wholesale volume
of 2.6 million tons, 44 % of all farm products sold in Shanghai.
These wholesale markets achieved 6.5 billion yuan (US$785 million)
in transactions in 1997.
While promoting the construction of large consumer markets
, the city also gave active support to the development of some special
markets, such as those selling small household items, second-hand
goods, warehouse clearance products, arts and antiques, flowers
and auctioned items.
Shanghai has been holding an annual national trade fair
since 1992 and the scale of the East China Fair is growing each
year. The fair in November 1997 covered over 70,000 square metres
in space and had 1,000-plus standard stalls. About 1O% of the exhibitors
were from abroad. The fair attracted more than 50,000 businesspeople
and reported signed deals worth 3.32 billion yuan (us$400 million).
Commerce is well developed in Shanghai and the city
boasts more than 1,000 product brands, including about 400 old brands
and 30 famous brands. In 1997 the Shanghai Commission of Commerce
put forth the "Brand-name Strategy" to boost the local
commerce and selected 50 top brands for promotion. As a result,
the city's retail
sales exceeded 6 billion yuan (US$724 million) in 1997, a 35% jump
over the previous year.
Shanghai has nine famous trademarks. Most of their owners
are also the market leaders. Kai Kai, for example, is the largest
shirt manufacturer in China; Old Temple is the largest dealer of
gold jewelry in Shanghai while Sea Lion holds 65% and 85% of the
local market with its bottled and unbottled refined cooking oil,
Through years of market competition, the city's commercial
enterprises have developed many brand-name products. Twenty-one
of them were awarded national medals for superior quality; another
300 products received quality prizes from the Ministry of Internal
Trade and the Municipal Government. They include soy sauce, cooking
oil, rice wine, pastry, suits and shoes.
Brand-name products owe their popularity to high quality. Variety
is another ingredient for the success of brand-name products. Technological
input also made some traditional products more competitive. The
Shanghai-brand cold meat is processed using modern equipment to
guarantee its fresh taste and texture.
By the end of 1997, Shanghai had registered 624 for-eign-funded
commercial projeets9, involving US$3.8 billion of overseas capitals.
These include 82 retail joint ventures with a total investment of
US$1.63 billion. Their combined business space is 880,000 square
Major Joint Ventures
Ecko Lotus Supermarket is a joint venture between Shanghai
Vegetable Corp and the Ecko Investment Co Ltd of the Chia Tai Group
of Thailand. It has a registered capital of US$32 million. The first
store is located in Pudong New Area with a business space of 15,000
square metres. The second store is located on Zhoujiazui Road with
a space of 8,000 square metres.
Shanghai No.1 Yaohan Co Ltd is the first Sino-foreign retail joint
venture in China approved by the State Council. It is owned by the
Shanghai No.1 Department Store Co Ltd and the Yaohan International
Ltd of Japan. Its main store, the Nextage Department Store, is on
the busiest street in Pudong. The building has a floor space of
100,000 square metres, the largest for a department store in Asia.
Shanghai Times Plaza is located at the intersection of Pudong Road
S. and Zhangyang Road in the Lujiazui Finance and Trade Zone. Invested
by the China Resources Co Ltd of Hong Kong and the Hualian Joint
Stock Co Ltd of Shanghai, the building is managed by China Resources
Shanghai Ltd. It has nine floors ror shopping and recreation and
one floor for office leasing.
Shanghai Jusco Co Ltd is jointly owned by the Jusco Co Ltd of Japan,
Kerry Department Store Co Ltd, Shenghua Horizon Co Ltd, Huayue Merchandise
Co Ltd and the Mitsubishi Co Ltd. Its first Japanese-style supermarket
opened in the Kerry Everbright City in September 1996, with a retail
area of 10,000 square metres.
Shanghai Carrefour is a joint venture between the Carrefour Corp
of France and the Shanghai Lianhua Supermarket Co Ltd. Its first
store opened on QuYang Road in December 1995 with a business space
of 4,000 square metres. Its second store opened on Wu'ning Road
in December 1997 with a business space of 9,000 square metres.
In 1997, the number of commercial corporations in Shanghai
was cut from 63 to 56 through mergers. The Shanghai No.1 Department
Store Co Ltd and the Hualian Corp became the country's largest retailers.
The Hualian Corp was chosen to experiment with the reform of key
State-owned enterprises in China. The No.1 Department Store Co Ltd,
Hualian Corp, Friendship Store Corp, New Asia Group, New World Holdings,
Yuyuan Commercial Corp and Huaihai Group were listed by the city
government as key enterprises for support.
No.1 Department Store
Shanghai No.1 Department Store Co Ltd is a state-owned
conglomerate with diversified businesses ranging from retail, foreign
trade, industrial investment to real estate development. It has
more than 1OO subsidiary companies, 800,000 square metres of properties
and gross assets of 6.45 billion yuan.
In 1997, the group chalked up a business turnover of 1l.56 billion
yuan (US$1.39 billion) and foreign exchange earnings of US$12 million.
The Shanghai No.1 Department Store has been the largest retailer
in China for 13 years in a run. The Nextage Department Store in
Pudong has the largest shop space in Asia.
The Hualian Corp is a large chain store company and
one of the major enterprises supported by the municipal government.
Since its founding, the Hualian Corp has adopted the "group
strategy" for business expansion. It now operates supermarkets,
convenience stores, exclusive shops, department stores and goods
distribution centres. It also has investment in real estate, advertising,
interior decoration, restaurant, auction and ocean-liner catering
businesses. In 1997 the company achieved a business turnover of
1O billion yuan (US$l.2 billion), a net profit of 124 million yuan
(US$15 million) and total assets of nearly 5 billion yuan (US$600
Shanghai Yuyuan Corp Ltd
The Yuyuan Corp Ltd is a large enterprise group with
diversified business. It was created through the merger of the Yuyuan
Tourist & Commercial City Ltd and the Shanghai Old Stores Corp.
The group has 31 companies, 831 retail and catering outlets, 200,000
square metres of properties, and total assets worth 2.74 billion
yuan (US$330 million). Its 1997 sales turnover was 5.51 billion
Shanghai New World Holdings Corp
The New World Holdings Corp is among the first group
of industrial and commercial companies selected nationwide to experiment
with the modern enterprise system. It has total asset of 4.44 billion
yuan (US$537 million), 1O subsidiary companies and 230 retail outlets,
including 33 specialty shops and 41 old-name stores, all located
in downtown streets. The group's sales turnover was 7.63 billion
yuan (US$92t million) in 1997.
The New Asia Corp Ltd
The New Asia Corp Ltd is one of the 54 enterprise groups
supported by the city government. Its subsidiary, the Shanghai New
Asia Share Holding Co Ltd, is a listed company with stocks traded
in both A-share and B-share markets. The group owns 24 hotels with
5,402 guestrooms. Half of them are four-star and five-star hotels.
It also owns 39 KFC franchise restaurants.
The Friendship Store Corp
The Friendship Store Corp is among the 54 enterprise
groups supported by the city government and was chosen to pilot
the modern enterprise system. Its total assets have accrued to 3.38
billion yuan (US$400 million), including 1.15 billion yuan (US$139
million) of net assets. Its sales totaled 5 billion yuan (US$600
million) in 1997 and foreign trade topped US$70 million. The group
has 22 companies: 1O wholly-owned companies, eight holding companies
and four joint-stock companies. Among them, the Shanghai Friendship
Overseas Chinese Ltd, the Lianhua Supermarket Co Ltd and the Shanghai
Interior Decoration Company are large companies.
The Fishery Corp
Shanghai Fishery Corp is a modern enterprise with a
business scope ranging from fish production and processing to commerce,
foreign trade, scientific research and education. It has a total
asset of 547 million yuan (US$66 million), 20,000 or so employees,
nearly 200 offshore and deep-sea trawlers; cold warehouses with
a capacity of 43,000 metric tons, 17 processing plants capable of
making 1OO-plus aquatic products. The Jiangpu Road Fish Market is
one of the largest fish markets in China.
Shanghai is one of the oldest port cities in China with
close contacts with the outside world. Through many years of trade
activities, the city has developed its own distinctive culture characterized
by a marriage of Eastern and Western cultural values. Shanghai is
receptive to new ideas, new styles and new methods. This makes it
a trend-setter in China. The bustling Nanjing Road, Huaihai Road
and Sichuan Road each has its own style. Various cultural festivals
also help boost the local commerce.
During the transition from the planned economy to the
market economy, Shanghai's commercial enterprises put a big emphasis
on the education of professional ethics and held various activities
aimed at raising service standards. In 1995, the sector introduced
the slogan of "dedication, honesty, fine service and contribution"
as a way to improve customer service.
Starting from 1995, a "customer satisfaction"
campaign was carried out first in chain stores and shops on Nanjing
Roads Huaihai Road, Sichuan Road and in the Yuyuan and Xujiahui
shopping hubs. The next year it was extended to 14 district shopping
centres and to the whole city in 1997. The city selected 114 large
retail companies for public appraisal and a poll showed that 96%
of local customers were satisfied with the commercial service.
Shanghai's commercial sector elected 84 model workers
and 24 advanced units in 1997.
A great number of new department stores and shopping
malls are combining traditional Chinese culture with modern art
design, creating a beautiful and cozy environment for shoppers.
window shopping has become a pastime for many local residents.
Education and Training
Shanghai has 114 vocational schools to train workers
for the commercial sector. They include one college, four full-time
technical schools and a dozen part-time schools, and they employ
over 1,600 teachers, including 80 professors, associated professors
and lecturers. In 1992, the city launched a training program to
ease the acute shortage of skilled workers in the commercial sector.
A job qualification system was also introduced and workers must
have skill certificates to go to job. The goal is to implement the
qualification system in 1OO major professions by the year 2000,
such as jobs in the marketing, catering, warehousing and transport