Here are snippets as reported by Bloomberg outlining the poor performance of shopping malls in China. Surely this is going to affect Macau as well and must send off warning bells to the developers planning shopping center here. Macau is China after all and most of the rules apply here as 60% of the visitors are mainland Chinese.

The world’s largest shopping center looked almost deserted on a recent afternoon. While schoolchildren rode the sidewinder and roller coaster, there were few shoppers and fewer tenants at South China Mall in central Dongguan, a city of six million north of Hong Kong.

A walk around the mall’s 220 palm-tree-lined acres takes a visitor past an indoor amusement park, replicas of seven cities including Venice, Milan and Amsterdam, an 85-foot, or 25 meter, model of the Arc de Triomphe and a 1.3-mile, or 2.1 kilometer, artificial river with gondolas for hire. There is retail space for 1,500 stores in the 89-hectare mall, only a handful of which are leased.

The mall’s developers expected to attract 100,000 visitors a day, the number that it would take to keep its vast shopping areas from looking deserted, according to Ian Thomas. His firm, Thomas Consultants in Vancouver, British Columbia, helped with leasing and marketing. Instead, more than a year after it opened, the mall gets about 10,000 a day, said a spokeswoman for the mall, Joanne Zhu. That leaves its open-air pedestrian streets almost empty.

“The mall is going through a development stage now,” said Grace Liu, a public-relations officer for the mall. “Its current performance doesn’t mean it won’t do well later.”

The crowd on a recent day seemed to consist primarily of teenagers there for the rides or to socialize. There were a few workers on lunch break at the McDonald’s and KFC restaurants.

“It’s Disneyland and Las Vegas come to China,” Thomas said. After his firm signed on in 2004 to assist with the mall’s marketing, he realized that even this manufacturing hub, one of China’s richest cities, could not support a retailing behemoth.

“They rushed to build and open it,” he said. “They honestly thought that by building it, they would come.”

Huang Xiaoyan was treating herself to a burger and fries at McDonald’s, but said she would not be spending money on anything else. “I’m just here to meet friends, not to shop,” said Huang, 29.

Huang’s frugality exemplifies the challenge facing Chinese officials as they seek to quicken the pace of consumer spending relative to investment and exports. China’s economy now is “unstable, unbalanced, uncoordinated and unsustainable,” Prime Minister Wen Jiabao said last month in Beijing.

Private consumption in China accounts for just 35 percent of gross domestic product, about half the share in the United States.

The Chinese save about half their income. Job-cutting at state-owned companies, which once provided lifetime employment and benefits, has eroded income security. An inadequate social safety net requires Chinese to save for retirement, health care and their children’s education.

Chinese reluctance to spend and eagerness to save is the opposite of attitudes in the United States. While the savings rate in China is the highest of all major economies, the U.S. rate is negative. Until spending and savings patterns in China and the United States change, trade imbalances will grow worse, according to officials.

Over the last few years, hundreds of malls have popped up across China, which now claims seven of the world’s 20 largest centers. Two of those, Oriental Plaza in Foshan and Grandview Mall in Guangzhou, are within 50 miles of South China Mall.

South China Mall’s 9.6 million square feet, or 892,000 square meters, makes it more than twice the size of the biggest U.S. shopping center, Mall of America in Bloomington, Minnesota.

South China Mall has no Gap, Banana Republic, H&M or other staples of a typical American or European mall. The few stores open are primarily from Asian chains.

Away from the few stores and restaurants near the entrance, the mall’s three levels of retail space are a ghost town.

The one store with customers spending money is a SPAR supermarket, part of the Amsterdam-based SPAR International. The store appears to account for the majority of shoppers spending money at the mall. Most load up with groceries and leave, never venturing further to take in the sights of Paris, Milan or Hollywood.

Source

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