Debut Economy Stimulates Consumption Capacity - 2022-11-03
As the 5th China International Import Expo (CIIE) will soon open, how many top-level companies worldwide will participate in the event? What new products, cutting-edge technologies, fashion brands, and quality goods can we expect to see?
Novel and unique products featuring special and sophisticated technologies became sensations during the CIIE in previous years. China’s Ministry of Commerce reports that more than 1,500 new products, technologies, and services made their China or global debuts during the CIIE over the last four years. As Shanghai becomes more experienced in hosting the CIIE, companies are more willing to launch new products and technologies here as a starting point to reach the global market.
The 5th CIIE will be a more professional and influential exhibition of higher quality. Participants include more than 280 companies on the Fortune 500 list, fashion giants, and top-tier companies in medical devices, pharmaceuticals, and auto industries. Many of them will introduce and launch new products.
For example, Johnson & Johnson, a global healthcare giant, will display nearly 200 innovative products, including 40 that will make their China or global debuts. Honeywell, a global high-tech company, will exhibit more than 60 innovative products and solutions in the five fields of energy transformation, air transportation, smart building, intelligent supply chain, and healthcare.
Debut economy has become a buzzword in China as the CIIE increasingly demonstrates its effect of empowering new products. Debut economy often involves the opening of first stores in a region by leading or emerging brands. The concept also applies to traditional businesses when they revitalize business models and open first stores. Debut economy derives its momentum for growth and core competitiveness from innovations in product, technology, and business model. It provides consumers with unprecedented experiences. It drives economic growth by promoting enthusiasm for consumption, expanding the influence of brand value, and familiarizing the public with business culture.
The introduction of first stores and the formation of their clusters not only stimulates and restructures consumption but also drives urban transformation. A premium first store attracts a huge number of customers. In return, the large number of consumers convinces more companies to launch first stores in the commercial area. The development of the debut economy thus helps shape a virtuous circle.
Furthermore, after a first store stabilizes its operation, it will become a role model for others to follow suit. The growing number of such stores will boost tax income, employment, consumption, and capital investment. The new momentum will bring more possibilities to city development. Therefore, a robust debut economy is a defining feature of an international consumption destination.
In the face of increasingly homogeneous commercial complexes, the introduction of scarce and unique first stores will reshape the traditional commercial landscape, meet diverse consumption demands, and invigorate urban commercial areas. Therefore, many Chinese cities are competing for resources as they see the tremendous potential of the debut economy.
Shanghai proposed in 2018 to make the city a prior choice for global companies to launch new products, and a prior destination for premium and original brands to open first stores. Beijing announced in 2020 several measures to boost the debut economy. The city will fund global companies, authorized agents, and domestic brands if they choose to launch first stores in town.
As one of the most dynamic cities in terms of consumption capacity, Shanghai is a nationwide leader in the quality of quantity of first stores. 1,078 first stores were opened in Shanghai in 2021, a year-on-year growth of 18.6 percent. 14 of the stores are the first of their kind in the world or in Asia. 167 are the first of their kind in China. Over 3,000 brands from home and abroad introduced, exhibited, or launched more than 5,400 new products in Shanghai.
The secret of Shanghai’s attraction to first store lies in its globalized disposition and open and inclusive culture. The city is also known as a pioneer in fashion. Moreover, the spillover effect of the CIIE contributes to the formation of the debut economy in Shanghai. Companies are more willing to launch new products online and offline and open first stores here via a trio of platforms—the CIIE, the Shanghai Fashion Week, and the Shanghai International New Product Debut Season.
Thanks to all the advantages, Shanghai has become the first footing for many overseas brands to land in the Chinese market. Shanghai ranks second in the world in terms of retailer clustering. 90 percent of internationally renowned premium brands have business operations in Shanghai.
The fast development of the debut economy in leading metropolitans has generated a spillover effect for neighboring cities. For example, after opening their first stores in Shanghai, many companies extend their businesses to cities like Wuxi and Ningbo. Likewise in the Greater Bay Area in southern China, cities like Dongguan and Foshan follow Guangzhou and Shenzhen to benefit from the development of the debut economy.
The continuous development of the debut economy, whether it forms clusters or extensions, depends on an ever-improving business environment. It is a test for government departments to provide better services with innovative thoughts.
The author is Sheng Lei, research fellow of the Institute of World Economy of Shanghai Academy of Social Sciences and Shanghai Research Center of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era.
Source: Jiefang Daily
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