1 Zola and Retail Marketing
2 Playing the Waiting Game
3 Beware the Ides of March
4 The county not on a map
5 Chinese Chess in Beijing
6 Build it and They'll Come
7 Riding the Water Dragon
8 The Best of Both Worlds
9 Storming the Great Wall
10 Welcome to the Wangba
11 The Catcher in the Rice
12 The Marriage Business
13 The Crouching Dragon
14 Counting the Numbers
15 A Century of Migration
16 Shooting for the Stars
17 Rise of Yorkshire Puds
18 Harry Potter in Beijing
19 Standing Out in China
20 Self-pandactualisation
21 Strolling on the Moon
22 Tea with the Brothers
23 Animated Guangzhou
24 Trouble on the Farms
25 Christmas in Haerbin
26 Dave pops into Tesco
27 A Breath of Fresh Air
28 The Boys from Brazil
29 Rolls-Royce on a roll
30 The Great Exhibition
31 Spreading the Word
32 On Top of the World
33 Moonlight Madness
34 Beijing's Wild West
35 Avatar vs Confucius
36 Brand Ambassadors
37 Inspiring Adventure
38 China's Sweet Spot
39 Spinning the Wheel
40 Winter Wonderland
41 The End of the Sky
42 Ticket to Ride High
43 Turning the Corner
44 Trouble in Toytown
45 Watch with Mother
46 Red-crowned Alert
47 In a Barbie World
48 Domestic Arrivals
49 Tale of Two Taxis
50 Land of Extremes
51 Of 'Mice' and Men
52 Tour of the South
53 Brooding Clouds?
54 The Nabang Test
55 Guanxi Building
56 Apple Blossoms
57 New Romantics
58 The Rose Seller
59 Rural Shanghai
60 Forbidden Fruit
61 Exotic Flavours
62 Picking up Pace
63 New Year, 2008
64 Shedding Tiers
65 Olympic Prince
66 London Calling
67 A Soulful Song
68 Paradise Lost?
69 Brandopolises
70 Red, red wine
71 Finding Nemo
72 Rogue Dealer
73 Juicy Carrots
74 Bad Air Days
75 Golden Week
76 Master Class
77 Noodle Wars
78 Yes We Can!
79 Mr Blue Sky
80 Keep Riding
81 Wise Words
82 Hair Today
83 Easy Rider
84 Aftershock
85 Bread vans
86 Pick a card
87 The 60th
88 Ox Tales
2001 to 2007

China's Sweet Spot

Dancing in the streets of Neijiang

People have been calling it “Sweet City” [Tian Cheng] for generations.  The name pays tribute to Neijiang's erstwhile regional importance as a producer of candied fruit [guofu] and grower of sugar cane.  Guofu can still be found – if you are prepared to search for it that is.

ut, as befits the way it is sold in the few surviving local street markets, what’s left of the industry is merely a quaint side-stall on the outer fringe of the fast-developing Neijiang economy.  But that's not to say that things have turned sour for Neijiang's 4.3 million people.

On the contrary, the fast-rate of economic growth that Neijiang has enjoyed in recent years (16.2 per cent year-on-year GDP growth in 2010), and the significant growth opportunities that are accruing from the city’s position at the centre of the newly-established Chengdu and Chongqing economic zone, suggest that Neijiang is still living up to its “Sweet City” promise. 

But what about the recent slowdown in China's economic development (the country is likely to finish the year with a growth figure of about 9 per cent), and the significant problems that many exporters are encountering because of the drop-off in demand… surely these factors will feed through to the local economy and render last year’s 16.2 per cent growth unsustainable?  

Well, as jaw-dropping as the Neijiang GDP figure is, it appears that it can be maintained at very close to this level (at least for this year and next).  Tang Limin, the Neijiang Party Chief and head of the Neijiang city government, told me when I interviewed him on the 4th November that Neijiang is on track to deliver 15.5 per cent year-on-year GDP growth in 2011; which he forecast would increase to 16 per cent growth in 2012.

As well as revealing positive news on the city's GDP growth forecast, Mr Tang also told me that he was confident that his city's position at the heart of the new economic zone would ensure that increasingly more domestic and foreign investors would realise that Neijiang is the place to come.  He was also convinced that the value of Neijiang's exports would grow significantly (the city exported goods and services to the value of US$168m in 2010, spread across 68 countries).    

During the 90 minute interview, Mr Tang repeatedly turned to point at the huge map of the area that was mounted on the wall behind us.  The map looked as if it had been produced by someone from Neijiang's public affairs department, because a series of concentric ovals (with Chengdu and Chongqing on opposite sides of the innermost oval) drew attention to Neijiang city at the heart of it all.

To further emphasise Neijiang's centrality, a line that represents the main Chengdu to Chongqing highway cut from east to west along the centre of the oval, bisecting Neijiang (thankfully, the expressway is actually several minutes drive from the city centre).

“Xin!” … [Heart], said Mr Tang, …"Neijiang is at the heart!" [of the new economic zone].  But I had been wrong to think that this concept had been dreamt up by local politicians keen to assert their claim to the centre of the zone.

The Neijiang Party Chief pointed out that the map had, in fact, been drawn up by none other than China's central government.  Then I realised just how significant the map is.  Neijiang (a "tier 3" city) at the heart is flanked by the municipality of Chongqing to the east and Chengdu, the provincial capital of Sichuan, to the west ("tier 1" and "tier 2" cities respectively in political terms at least).  

Quite clearly, as well as being the "Sweet City", Neijiang is also a proxy for the "Sweet Spot" of China's future economic development. 

As Beijing and Shanghai languish in the (relative) doldrums of high single-figure GDP growth in the next few years, third tier cities such as Neijiang, and many fourth tier cities as well, have been handed the baton of double-digit economic growth.

The cities that will score the highest are the cities that will be able to feed and feed off the city economies of economically-vibrant adjacent larger cities (Neijiang is particularly blessed therefore because Chengdu and Chongqing are growing at 15 and 17 per cent respectively).

The stunning performance of Neijiang-like smaller cities in terms of GDP growth is also feeding through to significant increases in their residents' personal wealth, disposable income, and the amount of money that is spent on brands and stuff.  In Neijiang, for instance, sales of consumer goods in 2010 exceeded 20 billion RMB, a year-on-year increase of almost 19 per cent.   

In summary, consumers in so-called “lower-tier” cities will take an ever-larger share of China’s consumption pie.  This has been glaringly obvious for a long time of course, but understanding what to do about it from a marketing perspective has not been as well documented. 

Simply switching focus from “upper tier” to “lower tier” cities may sound like a good idea to some, but not all lower tier cities are developing equally of course.  And, as is demonstrated by Chengdu and Chongqing, some “higher tier” cities deserve to be the focus of more, not less attention.

Or, putting it another way, China-wide marketing and distribution strategies that are not built on an exhaustive city by city evaluation of economic reality and potential – as well as residents' standard of living and well-being – have every chance of missing China's Sweet Spot. 

 This article was written in November 2011 when the author was chairman of Oracle Added Value (now part of Kantar Consulting), and published on Kantar's website.

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