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Q: How are the gucci ghost malls financed?

Presumably they have owners and these owners aren't the state. What happens when a mall is loaded up with over-priced stock that doesn't move. How rich are these guys, and why aren't they bankrupted by making such a stupid decision of marketing 10,000 RMB apparel to people who make 3,000 per month on average before paying their household expenses?

 

Do you think they recollateralize?

5 years 1 day ago in  Business & Jobs - China

 
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I can only suspect they build these malls as a source of kick backs to the government. I think it goes something like this...

 

Government Official Guy : "Let's develop the city and add a new huge mall for no reason whatsoever!"

 

Real Estate Company : "Sounds good, give us the contract for 6 000 000 000 yuan and we will kick back 25% to you!"

 

Government Official Guy : "Sounds excellent, then we can sell/rent out the space to all those idiots... and make even MORE MONEY!"

 

Real Estate Company : "But what happens if nobody goes or nobody buys anything?"

 

Government Official Guy : "Oh that's easy... we buy out all the space from the idiots for a fraction of the cost when they go bankrupt, bull doze it... and do it all over again!"

 

Real Estate Company : "Sounds great! Just let me call up my thugs to kick these nong ming out of their homes first!"

 

 

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5 years 21 hours ago
 
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I think the profit margin on the item is good enough that they break even selling 2 bags a week.

Designer gear is one of the biggest cons going.

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5 years 21 hours ago
 
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Brands like gucci would not be operated by a franchise, they would be company owned, at least i would assume. At the end of each quarter or when ever new designs come in the old stock is destroyed in a furnace.

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5 years 21 hours ago
 
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I can only suspect they build these malls as a source of kick backs to the government. I think it goes something like this...

 

Government Official Guy : "Let's develop the city and add a new huge mall for no reason whatsoever!"

 

Real Estate Company : "Sounds good, give us the contract for 6 000 000 000 yuan and we will kick back 25% to you!"

 

Government Official Guy : "Sounds excellent, then we can sell/rent out the space to all those idiots... and make even MORE MONEY!"

 

Real Estate Company : "But what happens if nobody goes or nobody buys anything?"

 

Government Official Guy : "Oh that's easy... we buy out all the space from the idiots for a fraction of the cost when they go bankrupt, bull doze it... and do it all over again!"

 

Real Estate Company : "Sounds great! Just let me call up my thugs to kick these nong ming out of their homes first!"

 

 

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5 years 21 hours ago
 
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You have to remember that when Mr Decision Maker from Fancy Brand is looking at where in China to set up shop, he will be faced with a lot of malls, that all say they have international brands lined up. He will then think, "Oh, can't miss out" He will then be forced to sign a 5 year contract that starts right away even though mall is not completed. 

 

I've seen income statistics for my hood of Zhuhai, done by a company hired by the contractor building a big mall. Wanna guess if the average income for the area was well into the 5-digits ? 

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5 years 21 hours ago
 
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I often wonder this but I think Scots Alan is onto something about the profit margins - it doesn't take a lot of sales to reap lots of profits. Sure, most people can't afford the stuff but enough tuhao walk in and buy 5 bags to keep those places open and likely profitable. 

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5 years 20 hours ago
 
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Robk's answer.  They've built/building so many of these places in my little city right now that it's a head spinner.  Every time you do a lap of town there's another one under construction.

Not that many people live here.  There should be an enquiry.

Meanwhile a couple of dozen Kazakh migrants get burned to death the other day when the wind changed in their cardboard hovel just on the edge of town.

Not our business, said the govt.  They're Tacheng's business.  No local Hukao, so fuk them!

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5 years 19 hours ago
 
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ScotsAlan's reply sounds valid, but I also think another scheme is afoot as well. Chinese that are involved in illegal activities shuffle their large "profits" to these businesses, known as front or dummy corporations making them appear to be breaking even or doing well. The main reason is probably tax evasion I'd say.

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5 years 6 hours ago
 
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Chinese shopping malls suck because they don't really sell shit but clothing. In the modern city I live in, there is a huge shopping mall, something one would find in California or somewhere, and basically there is almost nothing in there I want to buy. Mostly, again, clothing. No electronics, household goods, game or toy stores, the book store went out of business, nothing but clothing, an decent supermarket (which isn't worth the distance to go out there), some Chinese restaurants, a McDonalds and that's it.

 

My city is also big on the big ticket designer shit too, but people here have money to piss about. I see Ferraris and Lamborghinis here and BMWs are easy to find. Chinese like to buy expensive shit to show off....."Look at me, and my expensive shit!" That is their thinking. I see people everywhere with IPhone 6s. Not because it is so great, but because the phones are like 3-5000 RMB and again, seen as an expensive accessory than something people need. Way of the road here.

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4 years 50 weeks ago
 
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Chinese shopping malls suck because they don't really sell shit but clothing. In the modern city I live in, there is a huge shopping mall, something one would find in California or somewhere, and basically there is almost nothing in there I want to buy. Mostly, again, clothing. No electronics, household goods, game or toy stores, the book store went out of business, nothing but clothing, an decent supermarket (which isn't worth the distance to go out there), some Chinese restaurants, a McDonalds and that's it.

 

My city is also big on the big ticket designer shit too, but people here have money to piss about. I see Ferraris and Lamborghinis here and BMWs are easy to find. Chinese like to buy expensive shit to show off....."Look at me, and my expensive shit!" That is their thinking. I see people everywhere with IPhone 6s. Not because it is so great, but because the phones are like 3-5000 RMB and again, seen as an expensive accessory than something people need. Way of the road here.

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4 years 50 weeks ago
 
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In Guangdong I cant think of a single high end "Gucci" mall that isnt stuffed with people 7 days a week from opening to closing.
They easily make a fortune.

The question that always bothered me was if everyone is shopping all the timenthen when do theu have time to work and pay for this stuff? I am really curious to know a true unemployment rate here.

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4 years 50 weeks ago
 
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quite often they are investments for the future. land investors aren't  allowed to buy land without building on it first. they have to submit plans. what can be built is strictly regulated. has to tie in with kick backs from construction. these investors have deep enough pockets to survive any short term loses.  i don't think they really care about what is on it at the moment

 

in the town i was in near zheijang province, the price of the property might have gone up 10 times since 2005. tripled since 2010.

 

another reason is that sometimes landowners/business people have more money than skills in commerce. i wonder how much research and analysis goes into what to build and where

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4 years 50 weeks ago
 
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This isn't something new. As early as the mid 1990s, these kinds of constructions are widely known among locals as face engineering​, the same principle is used later to build ghost cities. Besides bringing 'face',  they are a golden opportunity for corruption, and bring  employment to many, especially lowly educated peasants from the countryside  who flock to the cities (known as blind flows) looking for 'a better life'.  

 

The land costed nothing, everything was state owned under communism. It was a state crime to own land!   So, how come all of a sudden peasants owned land which they could sell to developers? Ever wondered why? This is the scam CCP uses. This is CCP's magic-money creation formula, out of thin air. Let them have 'ownership' and then sell it to create money, taking 50/50 or whatever ratio out of it.  You get rich, we get rich, stupid West is impressed, local morons chant "long live CCP, our livelihood is improving, we have 'gucci malls', free air-conditioning during summer (heck, you think we go there to buy Gucci? We go there to get free air-conditioning, stroll the malls!,  With these objects, now we have "face" in front of laowais. Look at how we insult and humuliate them anytime anywhere anyway these days!!!")

 

With the corruption money, now they can con laowais to sell them Mercedes and real Gucci!!! See the 'money genius' at work? These 'high end malls/cities' are thus self-financed. Fake gold with shit inside. True, many get fooled thinking 'look, look, china is modernised!'  

 

Not all that glitters are gold.

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4 years 50 weeks ago
 
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I think you guys are reading too much into it in terms of face/corruption/chineseness etc.

 

You go into any of the real high end malls, of course there are going to be a bunch of luxury stores that look like they aren't going to turn profits...but they don't need to. They're just showrooms. These brands make a fortune off Chinese customers but not necessarily IN china. The point is just to give them a place they can go and browse and get excited about the new stuff as it comes out. Then the bag that costs 60K RMB in Beijing looks like a total bargan at 42K in Seoul. If somebody buys anything there it's all gravy.

 

The stores also get way below market rents on the showrooms because they are a draw. Even non-luxury people go to those malls to browse and get photos taken in front of the nice stuff (and to be fair that is because they are dumb)...and then the couple of regular stores clean up. Uniqlo/H&M at those places are packed. Even if Prada doesn't make any sales or pay any rent...it still gets people in the door. And then the lesser brands make up the rent difference because of the halo effect the luxe brands have.

 

I mean nobody thinks less of this place than me, but in that case I don't think it's as ludicrous as you guys are making it out to be. 

 

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4 years 50 weeks ago
 
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