The best Chinese cities: Ranking of the most commercially charming Chinese cities 2017

There are no hard-and-fast rules governing how Chinese cities should evolve. Each city is unique and has its own development path.

The Rising Lab re-ranked 338 Chinese cities above the prefectural level based on the latest business data from 160 commercial brands, customer behavior data from 17 internet companies and Big Data on cities compiled by research institutions.

The new ranking assesses the commercial charm of the cities using the same five indicators from last year’s report — concentration of commercial resources, the city as a hub, urban residents’ activity, diversity of life and future predictability. However, there were some adjustments to the ranking methodology: adding assignment of weightings to 5 indicators from expert panel of The Rising Lab into computation, calculating secondary indicators and those at lower levels via Principal component analysis.

The findings suggest that the four first-tier cities, Beijing, Shanghai, Guangzhou and Shenzhen, still far outranked all the other Chinese cities. There were changes to the rankings of the 15 ‘emerging new first-Tier cities’– Chengdu, Hangzhou, Wuhan, Chongqing, Nanjing, Tianjin, Suzhou, Xi’an, Changsha, Shenyang, Qingdao, Zhengzhou, Dalian, Dongguan and Ningbo.

Dongguan and Zhengzhou are the latest additions to the list.

Last year, Huawei moved its headquarter and enterprise data center from Shenzhen to Dongguan. It was seen as an important landmark in the development of Chinese cities, and some people have even argued that ‘Dongguan is replacing Shenzhen as China’s electronic manufacturing base’.  For now, people look at Dongguan, the city located 60 kilometers from Shenzhen, in a new light after Huawei’s relocation.

Among all 5 indicators, Dongguan performed noticeably well on the concentration of commercial resources.  With a ‘commercial area’ of 1,064 square kilometers, it ranks among the top 10 Chinese cities with the most developed commercial infrastructure (measured by the number of restaurants and grocery stores). There were no Uniqlo stores in Dongguan four years ago, but the Japanese fashion retailer has 7 stores in the city now. The number of Starbucks stores has increased from 13 in 2013 to 31. The arrival of Heytea and many other milk tea shops run by web celebrities has spiced up the city’s nightlife. It now looks totally different from the die-casting industry center that it used to be just a few years ago.

Electronic manufacturing has flourished in Dongguan as its core industry. More importantly, in addition to many foundries, it is now home to some of the best-selling Chinese smartphone brands, such as Oppo and Vivo and Huawei soon. Profound changes in the city have created greater opportunities for young people, which retains them by offering a better life. Zhengzhou’s rise in the rankings is mainly attributable to its status as a central city in the region. Following the launch of the Zhengzhou-Xuzhou high-speed rail line in October 2016, the city has become a railway hub connecting Henan province in central China with the provinces of Anhui and Jiangsu in the Yangtze River Delta, one of the most dynamic regional economies in the country. Zhengzhou today is served by bullet trains to 129 other Chinese cities, the sixth-largest number in the country.

Admittedly, there is still a significant gap between these emerging cities and the four major cities, but they have come onto the radar of a growing number of people as suitable places to work and live. The e-commerce, finance or real estate driven growth model are not suitable for all cities. Every city has its unique strengths, something that can bring individuals that have disparate interests and personalities together, and this is exactly the beauty of modern cities.

The annual ranking, released by the Rising Lab, assesses the overall commercial attraction of the cities. We believe a city is not necessarily a good one even if it receives the highest score in a certain area. However, as we can see in the rise of the emerging new first-tier cities, a city should evolve along the development path most suited to it. The value of such an evolutionary process is that it brings high-potential individuals to the city, and then retains them.

The design creativity of this 2017 ranking is inspired by Penrose stairs, a two-dimensional staircase whose steps only ascend, but never descend. This is what we want to see in the cities, going up along their own development paths.

In what follows, we will spell out the specific dimensions and calculations of the five indicators.

A Concentration of Commercial Resources

When opening a store in a new city or at a new location, consumer goods retailers always base their decisions on objective analyses of the spending power of local residents and the city’s developmental potential. These analyses may contain subjective elements — a retail manager’s personal preference, for example — but the influence of such elements can be minimized by referring to professional commercial data evaluation  Two sub-indicators, ‘popularity among big brands’ and ‘commercial infrastructure,’ are developed based on the analyses to measure the amount of commercial resources available in the cities.

Cities differ from each other in terms of city size, formats of local businesses, people’s lifestyles and customs, so we conducted our analysis from a micro-perspective to more objectively assess the cities’ commercial development. We divided every city into square grids, with each side measuring one kilometer, and projected retail stores onto the grids. The stores are scored according to their commercial value to obtain the core commerce indicator for the cities.

As was the case with last year’s study, we calculated the cities’ sizes based on gross domestic product, population and total consumer goods retail sales.

B The City as a Hub

Cities do not exist in isolation, and every city has the potential to influence others using its own resources. Regional central cities can export goods, funds, and human and cultural resources to nearby cities through transportation, logistics operations as well as other channels.

A city’s traffic and logistics accessibility and the centrality of its commercial resources are reliable indicators of its pivotability in the region, and of which cities it is influencing or influenced by.

We used the distance between two cities by road and the number of trains and flights between them to calculate their traffic accessibility. Of the emerging new first-tier cities, Changsha and Wuhan have the highest degree of connectivity in this respect, followed by Hangzhou and Nanjing.

Xi’an, Chengdu and Wuhan outperformed all the other first-tier cities — except Beijing — in terms of regional centrality. Their commercial influence is significantly stronger than other cities in the surrounding areas, so retail brands naturally chose them as the first stops to enter the regional markets, acquiring a better understanding of the preferences of local consumers.

C Urban Residents’ Activity

Cities derive their vitality from the people that live in them. The internet is very popular in China, so data about internet users’ behavior is an ideal indicator of residents’ vitality and reflects changes taking place in the cities, as well as fluctuations in the size of young populations.

Take-out food delivery, domestic and cross-border online shopping, watching movies and mobile payments have become indispensable elements in the everyday lives of China’s young consumers. Apart from these life necessities, active city dwellers have emotional requirements for city life and plans for the future. The number of resumes posted on Zhaopin.com, the number of active users on question-and-answer website Zhihu, and the popularity of DidiChuxing are indicative, respectively, of how enterprising a city’s residents are, how much time they spend on learning new things, and how much emphasis they attach to efficiency.

Nighttime activity is assessed by the number of pubs and bars, mobile device nighttime usage data provided by TalingData, nighttime trips on DidiChuxing and availability of public transport services at night. Suzhou got the highest nighttime activity score. The city offers numerous pubs, and 30.9 percent of the local bus routes run between 10 p.m. and 6 a.m.

D Diversity of Life

An important aspect of a city’s attraction is the diversity of lifestyles it offers to locals. Diversity of Life is a key feature of cities, and creates a lasting emotional bond between cities and residents.

We collected data on the five activities that city dwellers most frequently participate in — catering, entertainment, tourism, sports and consumption. The data includes the total number of cafe shops, bookstores and gyms, online video views, total movie box office, running kilometers and flight bookings and shows the general leisure activity preferences of people living in different cities.

We placed greater emphasis on the diversity of leisure activities and facilities than on the quantity of facilities available in the cities. Using an algorithm similar to that of the Margalef biodiversity index, we calculated the variety of catering and online shopping services offered by the cities. Lifestyle is a very abstract and objective concept, and people understand it differently. What a city should do is offer more options.

E Future Predictability

Concentration of resources and the diversity of city life are the two most important things that attract young people to cities. On the other hand, prohibitive housing prices, traffic congestion and air pollution have forced some people to leave. Large cities are no longer the first choice. With the change in the city selection criteria among young people, local governments must realize that predictability for future development is also very important for their cities.

It is always possible for a city to develop further as long as it is able to attract and retain talented people, so the cities’ attraction of well-educated people is one of the first priorities in our study. The “attraction of talent” indicator was developed based on the number of good-quality higher education institutions, the number of resumes that a city receives from college graduates, and the number of overseas returnees.

“Entrepreneurship index” is another indicator that reflects the development potential of a city. Predictably, Hangzhou was found to have the best entrepreneurial atmosphere among the emerging new first-tier cities. Startups in the city, especially dotcoms and IT firms, have attracted many investors.

“Consumption maturity” examines how much local consumers understand their actual needs. Mature consumers are the driving force for consumption upgrade. They know what they need in their lives, and are willing to spend money on improving their quality of life, which is vitally important for creating a virtuous circle in a consumption-driven economy.

Courtesy Newsrep