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Shenyang: From Rust Belt to Riches

Market Researcher P.T. Black Visits Shenyang, the Hub of Northeastern China

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SHENYANG, China (AdAgeChina.com) -- Reading the international newspaper these days induces a sort of nauseating vertigo. Between politics, economic crises, and various food poisonings, my inclination has been to turn off the news and crawl into a cave.

Instead, last weekend I turned northward--to Shenyang.

Shenyang is the capital of Liaoning province, melon-seed-spitting distance from the North Korean border. With a population topping seven million, it is the largest city in northeastern China.

Rich with resources, the province is China's industrial base. Even so, it has had a rough time since economic reform moved China's economy south in the 1980s. The city has been unkindly dubbed the capital of China's "rust belt."
P.T. Black
P.T. Black
Recently though, Shenyang has experienced a bit of a renaissance. Government attention has finally started to return to the Northeast and infrastructure projects are coming online--Shenyang's long-awaited subway system among other enterprises.

Shenyang hosted some of the Olympic soccer matches last August, making it an official Olympic host city with all the rights to merchandising that entails. Heavy industry has mostly moved out to the outskirts, so the air is pretty clean. Roads are dauntingly wide, and traffic is relatively snarl-free.

Manufacturing breeds entrepreneurs, and the city now acts as a luxury goods hub for affluent Chinese across the Northeast. The drive from the airport to downtown Shenyang takes you past BMW and Mercedes dealerships as well as the requisite Louis Vuitton store.

Whereas Harbin, another major city in northern China, is close to Russia and its residents are arguably more, ah, elaborate in their taste (Versace goes great with fur!), Shenyang is the Northeast's primary shopping destination.

Confident and pragmatic
The city has a unique role in Chinese history. It served as the home of the Manchus as they surged forward to conquer China and establish the Qing Dynasty in the mid-17th century. Beijing's famous Forbidden City is patterned on a smaller palace the Manchus built in Shenyang, which is called Mukden Palace after the Manchurian name for Shenyang.

For hundreds of years, naughty emperors-in-training were sent here to learn traditional Manchu skills like archery and how to keep their toes from freezing off. Shenyang still has a large Manchu community, as well as an assortment of other groups, like Mongols and ethnic Koreans.

The people of Shenyang are famous for their simplicity and directness. The men tend to be unusually tall for China and very gregarious, always ready with a joke or cigarette. Middle-aged men tend to dress simply, saving their money for cars and alcohol. Middle-aged women are often very practical and direct, and they act notably less "precious" than women in southern China.

The really interesting thing about Shenyang though is the high level of confidence. Jigsaw probed Chinese across the country last year about their finances, and found people in Shenyang were more confident about their money management skills than virtually everyone else in China.

When we run quantitative studies among consumer groups in first and second tier cities, we regularly find Shenyang people answering like Shanghainese, residents of China's most developed and international city. This trend is especially true of Shenyang's women, who are as confident and optimistic as their peers in Beijing or Shanghai.

Last week, we specifically spoke to people in Shenyang about the global financial crisis. They laughed it off, noting that it would hit the trade-dependent South a lot harder than the North, which is more focused on the domestic economy.

Some even saw the crisis as a good thing, because it will probably lower real estate prices and strengthen the RMB, China's currency, for when they travel overseas. The city does not lack confidence!

Korean influences
Although it is a clearly important city, for some reason Shenyang seems ignored by the West. Geography is part of the reason. It's hard to be the "Capital of the Northeast" when Beijing is not far down the road.

Another factor is the limited attention span of many westerners, who have their hands full with the activity in the South and East, leaving little time to visit northern China.

Culture plays a role, too. Northern Chinese are generally considered to be less open to international trends than the outward-facing southern and eastern coasts.

In spite of that, Shenyang is a quite international city. No, it's not secretly hiding a tree-lined French quarter dotted with cafes and western restaurants like Shanghai. But Shenyang has a large and very active Korean community.

It is home to a mix of Chinese nationals with Korean heritage as well as Korean citizens. Together, they have built the area around the western pagoda (called xi ta) into a mini-Seoul, complete with blaring pop music, elaborate saunas, and the powerful smell of kimchee.

The Korean pop culture wave that has impacted all of Asia has hit Shenyang especially hard. Korean pop songs and frizzy hair styles are everywhere. The Korean hip-hop music style is particularly hard to miss, and there is some fine pop-locking on display on the streets in front of the city's downtown TV tower.

There are well over a hundred cities in China with more than a million people. Barely half a dozen of them are commonly mentioned in western press. But Shenyang is worth paying attention to. It's big, it's proud, its people like brands, and it's growing. And as an extra bonus -- they really know how to have a good time.

P.T. Black is a partner at Jigsaw International, a boutique lifestyle research agency based in Shanghai that looks at the direction of change in China, particularly among young adults. He can be reached at inquiries@jigsaw-i.com.

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