The rise of China’s secondary cities
Shenzhen in China’s Guangdong Province has become an electronics hub. (Virginie Blanquart/Getty)
China’s smaller cities may not get as much tourist attention as Beijing or Shanghai, but when it comes to business travel they are becoming more prominent. From Wuhan to Chongqing, Chengdu to Hangzhou, second tier cities are emerging as hubs for both international and domestic executives.
The statistics add up. By 2025, the Asian nation will have 221 cities with more than a million residents. Currently there are 160 cities in China with this figure, compared with only 35 in Europe, according to management consultancy firm, McKinsey.
China also has the largest number of hotels (by room count) in the pipeline. At 406,480 rooms, the country accounts for a third of all global rooms under development, with more than 1,500 hotels planned, many of which will be in secondary cities, reports Lodging Econometrics, a market research company.
In addition, the country's corporate travel spending is catching up with the US, and looks set to surpass it by 2014, according to the US-based Global Business Travel Association. A total of $245 billion will be spent on business travel in China this year, compared to a predicted $267 billion in the US.
“As China opens up, more international companies are strategically focusing on secondary cities for their development,” said Paul Cunningham, general manager at the St Regis hotel in Tianjin.
Many of these smaller cities are becoming hubs for fast growing industries such as electronics, pharmaceutical, manufacturing and machinery. For example Chongqing in southwest China is now a powerhouse for motorbikes, while Shenzhen in Guangdong Province an electronics hub. Despite low incomes in rural areas, China's secondary cities are also a magnet for global retailers such as Zara, H&M and Uniqlo.
“The central government has put a lot of focus recently on building better infrastructure to those cities, including new or upgraded airports, railway networks and highways,” said Philip Schaetz, senior vice president of marketing at Dorsett Hospitality International, a hotel operator in China.
And these destinations are being increasingly well serviced by direct flights from overseas. Air China is launching a Chengdu-Frankfurt service in May; Finnair is opening a route from Helsinki to Xian in June; September will see a Chengdu-London service from British Airways; while China Eastern started flying Nanjing to Sydney in December.
And the Kunming Changshui International airport in the country’s southwestern Yunnan Province, which opened in June 2012 and acts as a gateway to Vietnam and Laos, has been earmarked by the government to become mainland China’s fourth largest airport after Beijing, Shanghai-Pudong and Guangzhou.
There’s also been strong investment in conference facilities. For example, the city government in Wuhan, the capital of Hubei Province, has recently built a new exhibition hall. Reed Exhibitions, one of the world’s largest conference organisers, will run 55 shows in the 2013 to 2014 season, in more than eight Chinese cities outside the traditional hubs of Beijing and Shanghai, including Wuhan.
The most challenging aspect for these smaller cities is human resources and finding international facing people to man the hotels, airport terminals, taxis and conference halls.
“The labour market is very competitive with so many hotels opening, “said Lo Young, regional vice president of the Langham Hospitality Group, a global hotel operator. “To find the right people for the right jobs will continue to be a big challenge.”