Xinhua Insight: Market vendors leave Beijing for uncertain future

Like thousands of businessmen in Dahongmen, one of the major wholesale markets in Beijing, 45-year-old Shi Ankai has a tough decision to make: where to go next.

Shi's clothing wholesale chain, which he established eight years ago, needs relocation, according to an integration plan for Beijing and neighboring Hebei Province and Tianjin Municipality.

Shi has rented a shop in Baigou of Baoding City, Hebei Province, about a two-hour drive from Beijing, but he is not sure whether he will move all his business there.

"I have spent the last few months visiting different sites in different cities, which are offering different incentives, but none of them seem charming enough," he said.

Shi's indecision is shared by many wholesalers facing relocation. Beijing ordered markets to move to neighboring cities last year as part of an integration plan aimed at easing congestion and addressing other urban ills. Since then, competition has flared among neighboring cities including Shijiazhuang, Langfang, Baoding and Tianjin, each dangling its own incentives to lure businesses. However, the road out of Beijing has been bumpy for many.

A SLOW PROCESS

Dahongmen, translated as "big red gate," takes its name from the northern entrance of a royal garden established by a Chinese emperor about 600 years ago. Over the last two decades, Dahongmen developed into a large market with vendors selling clothing and a wide range of household items.

Before relocation kicked off last year, Dahongmen had 25,000 shops in 45 smaller markets or sections, which traded in clothing, fur, hats, shoes, construction materials and textiles, among others. There were 57,000 vendors and it attracted a total migrant workforce of 300,000 every year.

Under the integration plan, most of the markets will be relocated and renovated.

Lu Dawen, director of the market's relocation project, said only 10 sections will stay, and they will be focused on retailers and branded shops.

Since last year, nine small markets with lower trade volume have closed, affecting 12,880 workers and vendors. Last month, two shoe markets were shut down.

However, many say relocating the remaining markets will be a lot harder, as many of the businesses have strong ties to the area.

Lu said the relocation will be finished by 2018. While the deadline approaches, tenants say the lack of a timetable and step-by-step procedures has troubled many.

"I still haven't decided yet. I'll look around and see how things are heading," said Shi Ankai.

Jin Guijie, 50, is still busy overseeing his garment sales at the Dongpi market, the Chinese abbreviation for the Beijing Zoo Wholesale Market in downtown Beijing.

Though business is still bustling for now, he worries about the future. "My contract with the market expires next February. Although we have not received notice of moving, we are worried it may come eventually. I will run a fire sale on the inventory starting this month," he said.

"What if I put my money in Hebei and no customers come? The old market is already struggling under the economy, let alone new ones," he said.

WHAT BEIJING HAS AND THEY DON'T

In Beijing, it is common to see young retailers carrying big black plastic bags filled with shirts, coats and pants purchased at Dongpi or Dahongmen.

Few doubt the purchasing power of the Chinese capital's population, with total permanent residents numbering 21 million. Beijing's average disposable income per person was 43,910 yuan (6,960 U.S. dollars) in 2014, while Hebei's was about half the amount, at 24,220 yuan.

The easy and direct access to the market, convenient transportation, a trained workforce, favorable support facilities and infrastructure give Beijing a lasting allure for vendors.

Nearby cities, which are vying for their business, have offered various incentives, including free rent, tax cuts and favorable medical, housing and education policies. But unless tenants are guaranteed success, the grass in Beijing looks greener, and many business owners are cautious about rushing to any decision.

According to a poll of 10,000 vendors at Dahongmen, 65 percent said they do not want to leave Beijing. About 30 percent replied that they are willing to try business elsewhere, but do not find Hebei Province to be an ideal location. The rest of them said they would rather go back to their hometowns, many of which are in southern and eastern China.

A new Dahongmen market has been set up in Baigou, and about 1,500 business owners from Beijing have established operations there, said Zheng Gang, a senior manager of the market.

"Few tenants have moved all of their business here. Their inventories are quite low, driving away the few wholesale buyers that did come here," he said.

Business at the new Dongpi market in Langfang City is also bleak. Daily customer flow is only 4,000, compared to 50,000 at the old Dongpi in Beijing before relocation started.

A WELCOME CHANGE, FOR SOME

Wang Baisong was among the first group to leave Beijing. Last year, the 35-year-old moved his shops and warehouses from Dahongmen to Baigou.

Now he has bought an apartment in the town and sends his two children to local schools.

"My shop in Beijing was 12 sq meters, and the rent, the warehouse, the tons of fees and costs piled up to 500,000 yuan a year. The pressure is overwhelming. It's like I owe a debt of 2,000 yuan once I open my eye everyday," he said.

Now he runs a 100-sq-meter shop selling men's clothing, at 10 percent of the cost in Beijing.

"Relocation for me brings a better quality of life. For others, I'm not sure. They need to get something from relocation," he said.

"I hope the infrastructure and other support services can be improved, and more tenants will come and bring more customers," he said.

Another ambitious project is being planned in Yongqing County of Langfang, an hour's drive south of Beijing, to provide new homes to those displaced from the capital. Investment in the project, which has been marketed as the "China Fashion Capital," is 60 billion yuan.

"We plan to invest more in transportation and provide better services to attract resources and people here," said Yang Huabin, director of the Yongqing Economic Development District. Endi