Already a Bloomberg.com user?
Sign in with the same account.
Texas Instruments Inc
Suntech Power Holdings Co Ltd
Bayerische Motoren Werke AG
Estee Lauder Cos Inc/The
“Nicky” Wu Qilong, a 41-year-old action star with a well-greased mohawk, no longer has the unlined face of his glory days, not that his twentysomething female fans care. On a September afternoon they squealed as he swaggered onto the set of the talk show Fei Chang Kao Pu (Very Trustworthy) and shook hands with celebrity host Wang Han. It was Wu’s second appearance in as many months on a show produced by the popular Hunan Broadcasting System, and he joked about his frequent trips to the capital of China’s south central Hunan province: “I come so often to Changsha, I should make a home here.”
Photograph by Christina Larson
Almost unknown outside China, Changsha (population 3.1 million) is one of the second-tier cities emerging as engines of China’s next wave of growth. In its 2011 Urban World report, the McKinsey Global Institute projected that by 2025, 13 of the world’s 25 fastest-growing cities would be in mainland China, and that between 2007 and 2025, the country’s top 225 cities would be responsible for 30 percent of global economic growth.
In 2011, Changsha’s economy grew 14.5 percent, nearly twice the national rate, and McKinsey predicts its gross domestic product will triple between 2010 and 2025. Changsha has boosted its economy in part by turning itself into a star-making destination for celebrities. The hometown network, colloquially known as Hunan TV, is responsible for launching the wildly popular American Idol-like audition shows Chao Ji Nu Sheng (Super Girl) and Kuai Le Nan Sheng (Super Boy). Last year it was the top-rated provincial network in China, trailing in viewership only behind national behemoth CCTV.
Changsha is not just an entertainment center, it’s also home to two big construction-equipment makers, Zoomlion and Sany, which have benefited from the national building boom. Earlier this year, Sany, whose owner Liang Wengen is one of China’s richest men, bought German cement-pump maker Putzmeister, and the Changsha company is increasingly selling its excavators, truck cranes, and other specialty vehicles in India, Brazil, and Africa.
Just as Changsha has become an entertainment hub, many second-tier cities are also thriving because they specialize. Chengdu is a high-tech manufacturing center: Intel (INTC) recently moved its assembly and testing facility there from Shanghai, and Dell (DELL) and Texas Instruments (TXN) also have operations in the city. Chengdu’s gross domestic product last year grew 15 percent, according to the city government. Wuxi, home of Suntech (STP), is a leader of Chinese solar panel manufacturing; Xi’an, historically a base of the military-industrial complex, is heavily involved in the country’s efforts to develop an aerospace industry. The northeastern city of Shenyang, which became an industrial center during the Japanese occupation of Manchuria, suffered from high unemployment in the 1990s when state-owned factories closed. Its economy has since revived, thanks to assembly plants operated by BMW (BMW) and Boeing (BA), as well as other foreign investors.
Several forces are likely to contribute to the increasing dominance of these up-and-comers. Some larger metropolises on the coast have much higher labor costs than the fast-growing cities in the interior. The first-tier urban centers are also overburdened by the social services they have to supply. Because migrants tend to be young, providing for them in burgeoning central and western cities like Changsha, Chengdu, and Chongqing will be less expensive than in older northeastern industrial centers and the established coastal megacities. Shanghai by 2025 will have twice as many seniors as New York, says McKinsey’s Xiujun Li: “Changsha is younger, with a large service sector and young labor pool.” Wages are also lower than on the coast.
Youth and vitality are among the selling points of Hunan TV’s programs. It’s little wonder the network’s frequent advertisers include Chinese athletic-clothes companies and international skin-care brands such as L’Oréal (OR) and Estée Lauder (EL), which has sales counters in 44 Chinese cities.
In Changsha, Fu Gang, owner of night club Hito KTV, recently reclined on a black leather sofa in a karaoke booth with mirrored walls, reflecting on his hometown’s emerging role. “The entertainment industry represents the soft power of this city,” he says. “We know we cannot stand still.”
The bottom line: Of the world’s 25 fastest-growing cities by 2025, 13 are likely to be in mainland China. Many are specializing to fuel their growth.