Marketing Cities as Products in China

City development has become a close cousin to product sales in China, where developers are finding new ways to market their services as suites of urban products.
June 18, 2011, 9am PDT | Nate Berg
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"Alarmed officials have tried to crack down on runaway lending, but their efforts have been hampered by local mayors and party secretaries. Municipal governments typically raise anywhere between 15% to 25% of their annual budgets from land sales to private developers, a powerful incentive to keep building. One way to skirt the central government's disapproval is to promote prestige projects by proven developers -- leading some of them to become brands unto themselves.

Xintiandi and its sequels are one. Plaza 66, a Shanghai luxury mall-and-office tower complex developed by Hong Kong's Hang Lung Properties and its billionaire chairman Ronnie Chan, is another. Boasting the highest concentration of luxury brands of any mall in China, Plaza 66 posted a 31% gross margin last year. This spawned Palace 66 in Shenyang, "herald[ing] an era where we will open one or more new world-class commercial complexes each year," Mr. Chan promised in his annual letter to shareholders. He wasn't exaggerating. Next up is Parc 66 in Jinan, followed by Riverside 66 (Tianjin), Olympia 66 (Dalian), Center 66 (Wuxi), and Forum 66 (Shenyang again)."

This article also looks at the business of an American developer who offers "cities in a box".

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Published on Monday, June 13, 2011 in Ad Age
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