The City Of Gardens: Is Suzhou Luxury’s Next Opportunity?

Ancient gardens, gleaming skyscrapers, and high-tech factories provide a bird’s-eye view of Suzhou, a city located just 40 minutes’ drive west of Shanghai. Nestled in Jiangsu province, the city’s economy is more developed than that of 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 hospitality 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 that have all opened in the last half-decade, with Capella Hotel and Ritz Carlton to open in the coming years. Earlier this month, Marriott signed an agreement with Suzhou Jingyuan Hotel Management to debut the AC Hotels by Marriott brand in Greater China — a foray indicating confidence in the city’s touristic potential. A well-developed economy and vibrant, rich culture have lured many graduates from lower-tier cities looking for a lifestyle somewhere between top-tier hustle and sleepy hometown vibe. It’s become a viable alternative to the big city rat race while offering a better quality of life, nature, and innovation. In addition to this, high-net-worth individuals are fueling the city’s development and powering consumption. According to research launched by Hurun Report, there are 24,900 households that own liquid assets valued at over $1.39 million (10 million RMB) in Suzhou, ranking it 12th among the mainland’s cities. These impressive economic numbers point to Suzhou’s remarkable transformation over the past two decades, transitioning from an agricultural, manufacturing, export-oriented economy to an innovative, high-value, service-oriented one. Here, Jing Daily examines Suzhou’s retail, textile and manufacturing, and hospitality and tourism landscapes — revealing why the city is one of the most promising emerging markets for luxury companies. A promising luxury retail outlook Suzhou boasts well-developed textile supply chains, but recently it’s lured property developers as well. Its current luxury retail landscape doesn’t match the city’s solid economic growth. So far, only Meiluo Shopping Center houses top luxury names such as Hermès, Louis Vuitton, and Gucci. However, the dated facilities and inconvenient parking in the old city district discourage many local shoppers. “I haven’t been in Meiluo for two years. It’s hard to park there and everything looks old-fashioned. I’d rather drive 40 minutes to Shanghai if I want to shop for luxury stuff,” says Cecilia Xu, a 27-year-old fashion enthusiast born in Suzhou. Another landmark named Suzhou Center Plaza — a futuristic skyscraper — features high-end beauty boutiques like Dior and Chanel, as well as sports labels like Arc'teryx. This untapped demand offers huge opportunities, and Singaporean property developer Yanlord is one of the most agile in town. In 2021, the group announced the Yanlord Cangjie Project (仁恒仓街), which will renovate a historical building and launch a luxury complex including retail, art, 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 been restoring its ancient sites, and merging them into modernized neighborhoods. Meanwhile, with quaint gardens and waterside architecture, the home of Wu regional culture has preserved its heritage well. “Suzhou has always been a rich and populous area since ancient times,” explains Sam Gu, Marketing Director of Yanlord Commercial Property Division. “And in the last 20 years, residents have accumulated considerable fortunes thanks to the rapid development of second and third industries as well as advanced trade networks.” Alongside this, younger generations in Suzhou have strong cultural awareness and pride, especially when it comes to local Wu culture. “This demographic adds unique allure to the city’s luxury market.” Textile and manufacturing innovation Suzhou holds a critical role in the world’s 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 set the foundation for the rise of the textile industry there. According to official statistics, there are 2,500 textile companies in the town and two of them are on the Fortune Global 500 corporations list. This clustered phenomenon has facilitated the transformation of the local textile sector from individual firms to corporates operating across the supply chain. “After the pandemic outbreak and economic crisis, the small-to-medium business is finding it harder to survive and will likely be integrated by powerhouses,” observes Lesley Yu of the leading textile corporation Jiangsu Huajia Group and founder of Sanglou, a domestic sleepwear and lingerie line. Rather than traditional textile production, today’s competitive supply chains optimize front-end technologies as well as creative branding. However, Yu remarks that it’s still difficult to attract talent in these areas to Suzhou. “Even though the economy [of Suzhou] is developed, residents’ exposure to arts and culture is still limited compared to first-tier cities. That’s why we opt to set up creative headquarters in Shanghai to collaborate with designers.” Still, the city’s authorities are trying to recruit talents and accelerate the sustainability of the textile industry. With the negative environmental impact of fashion production, the Suzhou government encourages local factories to leverage new technologies such as artificial intelligence to facilitate greener, recyclable production. At Yu’s company, for example, “our silk is all organic and the carbon footprint can be traced via a carbon label attached to the fabric.” Transparent business ecosystems like this have allowed Suzhou’s factories and mills to become important suppliers for global fashion concerns. Challenges and opportunities ahead Given the promising outlook for luxury retail in Suzhou, it’s not just Yanlord that has its eyes on the market. Huamao Group and Hong Kong Land Holdings will launch new property projects in the city’s major districts in the coming years. Although the openings will provide more shopping destinations for consumers, establishments may be cautious expanding offline due to pandemic uncertainties. Shanghai’s developed luxury retail has been another obstacle for Suzhou. As Xu mentioned, many Suzhou residents tend to shop in Shanghai for better choices and experiences. To counter that, Gu suggests that commercial projects must leverage local culture to underline their differences against Shanghai shopping malls, through the partnership with local and global brands, which is exactly what Yanlord Cangjie has planned. In addition to local shoppers, domestic travelers cannot be overlooked. With China’s travel restrictions, short holiday trips have become a trend and Suzhou is one of the most popular destinations. According to official data, the number of visitors in Suzhou during the Golden Week Holiday (October 1-7) reached 5.53 million. From rising tourism and economic power to property development and supporting facilities, is Suzhou proving its readiness for luxury brands to double down on the city?

The City Of Gardens: Is Suzhou Luxury’s Next Opportunity?

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Published October 14, 2022

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The City Of Gardens: Is Suzhou Luxury’s Next Opportunity?