Market and Trade Data
Driving China’s Markets
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thinly developed marshland, Shanghai is now covered in
skyscrapers, including the Pearl Tower, China's largest
tower. Since the 17th century, when a complex system of
canals was constructed to drain the area, Shanghai has
evolved into its current role as China's commercial
capital. And this title is well deserved.
Shanghai may have once been a marshland, but
today it is a commercial capital of China.
means “on the sea.” Due to its location between the edge
of the Pacific Ocean and the mouth of the Yangtze River,
this one-time fishing village has been a center of
commerce since the 1920s. In 2004, Shanghai accounted
for 21 percent of China’s total imports, 32 percent of
China’s total exports, and 10.7 percent of China’s
foreign direct investment.
Shanghai’s potential for growth is only increasing. The
city helps drive a massive regional economy, and
continues to, making it an outstanding candidate for
Shanghai’s position as a driver of both the local and
the national economy is due to its wealth, its position
as a key import and distribution center, and its
Shanghai has an estimated 20 million people and is a
wealthy district. In 2004, the average income per capita
in Shanghai increased about 20 percent, compared to 12.2
percent in 2003. Additionally, Shanghai’s average urban
disposable income increased 12.2 percent in 2004.
Consumption expenditures have also grown. Most homes are
privately owned, where as recently as seven years ago,
the majority of homes were provided through the
workplace or by the government. In addition to the
district’s wealth, Shanghai serves as a key import and
distribution center with some of the best logistics and
transportation capabilities in China.
The port of Shanghai is routinely ranked in the top
three ports worldwide, and the addition of the Yangshan
deepwater facility places it first worldwide in shipping
volume. The Pudong air cargo terminal is also the
Additionally, products imported into Shanghai are
redistributed up and down the coast as well as inland to
cities as distant as Chengdu and Kunming. Shanghai
boasts a cohort of distributors whose reach now extends
to the furthest corners of the country and are
experienced in working with customs clearance,
quarantine, and currency exchange procedures.
Shanghai’s consumers are also vital to the district’s
about one-third of China’s population resided in
Shanghai. The district is also home to one of China’s
largest foreign communities – 300,000 to 500,000 –
including 15,000 U.S. citizens.
Consumers in Shanghai are very style-conscious and
brand-conscious, viewing famous brands as both status
symbols and guarantees of quality. High-end shopping
districts such as Nanjing Road or Huaihai Road are
crowded with top-end fashion boutiques doing excellent
business, despite the availability of low-cost
counterfeits just a block away.
Shanghai residents also still spend a high proportion of
their earnings on food. Shanghai per capita food
spending tops the nation. In 2004, wholesale and retail
sales of food, beverages, liquor, and tobacco amounted
to $16.24 billion.
Shanghai residents also spend three times more than the
national average on aquaculture products and more than
double the national average on dairy products.
As a result of its trendsetter status, Shanghai is also
now a major center for trade shows and has added new,
state-of-the-art facilities in the Pudong district.
won its bid for the 2010 World Expo. Additionally,
Shanghai is hosting the Food and Hospitality China Show
in November 2006 and SIAL in May 2007 – two of China’s
largest international food shows. Previously, it hosted
the 2001 Asia-Pacific Economic Cooperation summit and
the 1999 Global Fortune 500 Forum in addition to a
plethora of other trade shows in all areas of
Shanghai’s rapid growth has also been a boon to cities
in neighboring provinces. As costs in Shanghai continue
to rise, many industries have moved to nearby cities in
the Jiangsu and Zhejiang provinces.
With its economy growing, Shanghai is attracting new
businesses and retail development.
In 2004, Shanghai’s foreign direct investment increased
11.8 percent from the previous year, gross domestic
product increased 19.1 percent, imports increased 26.7
percent, and exports increased 30.2 percent.
Today, Shanghai is strong in automobile and garment
production as well as finance, banking, and insurance.
Additionally, Shanghai is now a hotbed of retail
development that continues to attract new businesses.
Retail sales revenue amounted to $29.7 billion in 2004,
up 9.5 percent from 2003.
Foreign retailers also continue to express interest in
Shanghai. The district has a wide range of foreign
hypermarkets, such as Carrefour, Metro, Lotus,
Trust-Mart, Aucho, and RT Mart. The U.S. chain,
Wal-Mart, as well as South Korea’s E-Mart and Japan’s
Family Mart are all in Shanghai.
Shanghai also has three of China’s top five domestic
supermarket chains – Lianhua, Hualian, and Nonggongshang.
Additionally, the district has about half of the
convenience stores in China.
Shanghai’s role as both an economic leader and a key
import and distribution center make the district an
outstanding candidate for imported foods.
Shanghai’s residents often act as trendsetters for the
rest of China, and the up-and-coming generation is
helping drive the movement toward ready-to-eat and
heat-and-eat meals in retail venues.
Shanghai residents also spend a remarkably large amount
of their income on dining out due to crowded living
spaces, busy schedules, and a gift-giving culture that
emphasizes high-profile entertainment for guests. As a
result, there are more than 30,000 licensed businesses
in Shanghai’s catering industry, and there are more than
1,000 Western restaurants. Additionally, catering
revenues account for nearly one-third of all operational
revenues and an even larger share of profits.
The emergence of high-end restaurant chains has become
an important trend, particularly for imported food
products, as they demand high quality and large volumes.
In addition to its own market potential, Shanghai’s
market structure offers increased access to markets down
the coast and inland.
Shanghai’s free trade zones such as Waigaoquiao offer a
wide range of services to importers including inventory
tracking, logistics, and cold storage. Suppliers can
ship products into the free trade zones and not pay
duties until they ship the products out of the zones.
The free trade zones also offer special tax and tariff
advantages to businesses that add value to imported
products prior to shipping them elsewhere in China.
Beyond the free trade zones, Shanghai also has a growing
number of specialized distributors that can handle
logistics, distribution, and marketing.
incomes in major cities deep in China’s interior are
often lower than in the coastal cities, the sheer size
of many of these markets makes them tempting. Many boost
a small but fast-growing middle class with a taste for
novel products and the money to buy them.
Simply put, the combination of Shanghai’s economy,
development, and geography make it an outstanding
candidate for imported foods.
Ralph Bean is the attaché in the FAS Office of
Agricultural Affairs in Chengdu, China and former deputy
director of the FAS Agricultural Trade Office in
Shanghai, which can be contacted at: E-mail: