I thought this would be of interest to all those curious about urban development in China. It is from Access Asia (www.accessasia.co.uk) for those who would like more (I appreciate their permission to reprint):

The China Luxury Game...Played with Different Rules

In the West, the luxury business has slumped alarmingly. Yet in China, stores keep opening and the luxury brands and mall owners keep on pumping out the good news press releases. But when anyone visits these malls and stores they're empty, and the staff are standing around picking their noses. So, what's going on, you might reasonably ask? And it seems set to continue. We know of at least three high-end mall projects, attracting luxury brands in Beijing, set to go ahead and with secured funding. Then there's Japan's Takashimaya upscale department store, which has just announced a 40,000 square metre (yes, that's right 40,000!) store in a Shanghai suburb. Over Chinese New Year, Louis Vuitton opened a flagship store in Taiyuan, a city most fashionistas would have trouble finding on a map. Meanwhile, last week, a sale of luxury goods in Macao led to fist fights among brawling women from the Mainland and Hong Kong Hell-bent on snapping up glitzy bargains. So here's how it can work... A property developer approaches a local authority with a plan to build a luxury high-end mall. Lots of talk of "international", "luxury", "lifestyle", etc. The local officials like the idea and tell the bank so; the bank manager (a Party member of course) lends the money (rather softly) to the developer. The developer then gets lots of migrant workers to build the mall, and subsequently fills it with luxury brands (who don't have to pay much in the way of rent or service charges). And hey presto, another luxury mall appears. All this, of course, depends on the following:
· A developer who's not really a developer, in the traditional sense, but who can build a mall, but get a larger loan, thereby trousering the difference between the total loan value and the cost of construction (while hopefully quickly flipping the project and selling it for a profit soon after completion);
· A bank that isn't really a bank, in the traditional sense, in that it make loans based more on policy considerations than financial ones, and takes advise from the local officials;
· Brands that, in China at least, aren't retailers, in the traditional sense, but want shop windows in China for advertising to encourage purchasing by local consumers when they go to duty free Hong Kong, Macao or wherever;
· Local officials who are driven by pride more than reality, and need to be able to claim they are making their tier-2 or -3 city (or tier-1 city district) more "international" and "modern", and who also have retail development targets to meet, friends who are property developers and comrades who are bankers;
· Central government officials who share the aims of the local officials above, but more so in terms of striving for a perceived "internationalism";
· Customers, who aren't really customers in the traditional sense, in that they are just looking before they go to buy in Hong Kong or elsewhere. So, we get the malls, the brands and the supposed prestige. The developer gets a payday maybe; the bank gets to lend where it's told; migrant workers get to migrate and work and local officials look good higher up the chain, while the top of the chain gets to claim China has more luxury stores than anywhere else, as well as faster trains, longer bridges, and so on, and so on. And, the FT gets to hold a silly luxury conference every year that says the same thing. Everyone's happy - who needs customers!! Leslie Chang's excellent new book Factory Girls contains a sign she saw somewhere that said something like "Let's build more power stations, roads and bridges so we can profit and make more power stations, roads and bridges". We're all familiar with this from the USSR, and so on. What makes you think it's any different with luxury malls? The truth is - it isn't. Existence is everything; turnover secondary. Now get out there and shop!