Wholesale market sold out

Shopkeepers come to the Beijing Zoo Clothing Market to replenish their stocks on December 31, 2013. Photo: Li Hao/GT

The Beijing Zoo is perhaps better known for the sprawling garment wholesale markets nearby than its animals. But now the city's officials are pledging to relocate the markets out of the area to ease overcrowding and optimize urban planning.

When Zhang Chengxuan managed to sit down and have his lunch at around 1pm on Saturday, he was exhausted from packing his goods and haggling with customers for over six hours at the Beijing Zoo Clothing Market.

All Zhang, a 28-year-old migrant from Anhui Province, and his fellow shopkeepers have been talking about over the last few weeks is the upcoming relocation of the well-known shopping hub.

"Have you heard the government will relocate the market? How should our business carry on?" Zhang asked nearby shopkeepers.

The market will be moved out of the center of Beijing, Beijing's Xicheng district government confirmed at a press conference on Tuesday, without revealing any detailed plans.

The confirmation came after a China Business Journal report on December 23, which said that the hub will be moved to Hebei Province, quoting an anonymous government official.

The government cited issues like traffic jams and the crowds that flock to the area, but experts point out that the government has also designated wholesale industries like this as being less desirable in packed first-tier cities like Beijing.

Bargains binned

The wholesale market, located opposite the Beijing Zoo in Xicheng district, between Beijing's Second and Third ring roads, was first built in the 1980s. It covers over 300,000 square meters. It includes over 10 wholesale markets and 13,000 stalls, employing over 30,000 people. The annual trading volume of the market is more than 20 billion yuan ($3.25 billion), the China Business Journal reported.

Early each morning, retailers from other areas in Beijing and other regions flock to the hub to fill their shelves.

The market is renowned for its cheap materials and shoes. Known as a "wardrobe for savvy bargainers" it also attracts many tourists.

"Opening a shop here used to be my dream. I've worked here for about 10 years, since I graduated from high school," Zhang said.

Zhang's shop, which he says costs over 15,000 yuan per month in rent, is located on the ground floor of Shiji Tianle, a market opened in 2005. On a good day, turnover can reach more than 2500 yuan, Zhang said. "I will feel concerned about my business if it is moved out of Beijing as we will lose customers," he added.

Many online shopkeepers also get goods from the hub. "I get goods there because it is convenient for me to check the goods personally. I can't afford to go to hubs outside Beijing every day,"said an online shop owner.

At the conference, the Xicheng district authorities said the market was not suitable for the type of development in downtown Beijing. It said moving the hub outside Beijing would "upgrade" the city's industries, and pledged to introduce "high-end" industries such as e-commerce, financial services and clothing design.

Population pressures

The city's population increased to 20.69 million at the end of 2012 with an average growth of nearly 600,000 people annually, Xinhua reported. The central government said in a December meeting that the size of megacities needs to be controlled in a bid to solve the pressure on urban resources.

Sheng Guangyao, an associate research fellow with the Chinese Academy of Social Sciences said that megacities around the country are focusing on the development of "high-end" industries such as service industries and technology-driven manufacturing.

"Relocating a single market will not solve all these problems but it is a practical attempt," Sheng said. "Low-end" industries, including wholesale business, should be moved to second or third-tier cities, which will also benefit the expansion of those industries, he said.

According to a China Business Journal report in December, the capital plans to renovate and relocate four downtown wholesale markets, including the Beijing Zoo clothing markets, the Dahongmen clothing markets and the Xinfadi farm produce markets in Fengtai, as well as the Shilihe building materials market in Chaoyang.

Liu Yu, vice head of the Fengtai district government, said that the storage facilities for the Dahongmen wholesale market hub will be moved to suburban areas or Hebei Province to reduce the size of the market, while the delivery service department of the hub will remain in Beijing, China News Service reported Wednesday.

Sheng suggested that the zoo market should follow the example of the Dahongmen hub.

But not all experts agree this move is ultimately in the city's best interests. Luo Yameng, an urban management expert, has a different view. He told the Beijing Evening News on December 31 that no industry should be viewed as "low-end." In comments he also posted on his blog, he said that the relocation campaign might be an attempt at a land grab, as the market is in a coveted area of the city and the land there would be worth a fortune. He said that labeling it a "low-end" industry would be one way to remove obstacles to purchasing the area.

The relocation project would damage the development of the area as the customers would ultimately lose out, said Luo.

Cash concerns

Although no detailed plans on the relocation and compensation have been revealed yet, shopkeepers have expressed concerns that their contracts will be terminated and they will not receive any compensation."What worries me most is that I have no idea who I should ask for compensation," Zhang said.

A staff member, surnamed Wang, from the management office of the Jinkailide International Clothing Wholesale Market, which is located in the area said they have not yet received any notice about the relocation from the authorities.

"Everything is as usual. At the moment, we are not about to end any current contracts with shopkeepers and construction companies because of the news about the relocation," Wang said.

The company has over 2,000 shops located in its building. Some shopkeepers have signed over 10-year contracts with the company, according to Wang.

"We collectively have paid over 800 million yuan which represented a major stake in the company three years ago, and its market value has almost doubled. The relocation will definitely cause big losses," Wang added. "All we can do is wait."