XuJiaHui Retailers Get FWOKED!

Tuesday, January 16, 2007 2:05

For the last 5 years, I have had the distinct pleasure of watching China literally rebuild. It started while I was in Beijing and saw entire blocks torn down, and it continues every day in Shanghai as new buildings go up.

On of the most exciting touristy things in Shanghai to do is to is to go to the Urban Planning Museum to see the model of Shanghai 2020 (See All Roads Post Here).

Part of this excitement is knowing that with all the new buildings, the government has put in place equally ambitious mass transit plans..

Last night, I while looking at Shangahiist’s coverage of the new website and station renderings for Shanghai’s new metro, I got excited as I look forward to the day I will no longer have to deal with traffic

Unfortunately for a number of retailers in Xujiahui, progress is not such a good thing, as see in today’s Shanghai Daily article entitiled Stores to Close During Metro Work

While the closure of these stores for 12 to 18 months may not seem all that important to readers at first glance, investors should take out a note pad and remind themselves to include the consideration of city development plans as part of their due diligence as it can happen to you.

For one manufacturer we worked with in Beijing several years ago, the road to perdition came through their factory, and despite the Fortune 500 logo on the side they had little power in stopping it. The government did provide a fair offer that include compensation and land, but for a shop that has only been open for a year, it was an offer that could not fully pay back the time related opportunity costs related to opening the first shop.

Same goes for investors in real estate whom pick the wrong plot of land. You will be moved regardless of guanxi, logo, or lawyers, and if you think the power company won’t shut off your power for a couple days in the name of progress, read this post.

Overall, investors in big cities will not have to face this as much as those looking at the second tier, but one should never take anything for granted in China… cause the train may come to town.

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One Response to “XuJiaHui Retailers Get FWOKED!”

  1. All Roads Lead To China » One Spoonful at a Time… China’s Metro System has BIG Plans says:

    May 16th, 2007 at 4:24 am

    […] Now after living in Shanghai, I am getting a bit excited as the plans for this place are huge. A while back, I wrote a post on a mall in Xuhui being shut down due to the construction of a metro station underneath them.. and that is just one location. […]