China's urbanisation shifts to overdrive

Looking to the lower tiers

Through this issue of China Confidential we look at the theme of urbanisation and the rise of China's county level, fourth tier cities. As such, we have profiled a selection of Chinese companies with a particular emphasis on expanding into China's lower tier cities to drive growth, starting here with Suning Appliance.

Lenovo Group (0992:HKG)

The computer manufacturer's pursuit of lower tier regions has so far come at the cost of margins.

Xinyu Hengdeli (3389:HKG)

The luxury watch retailer still has some way to run as sales at its new mainland sales outlets take time to ramp up.

BYD (1211:HKG)

Booming conventional car sales have boosted the company's performance this year, though hype over its clean cars maybe overdone.

Anta Sports Products (2020:HKG)

The sportswear manufacturer has embarked on an aggressive domestic expansion plan in the hope of beating Chinese rival Li Ning.

New Oriental (EDU:NYSE)

The private education provider is focused on consolidating operations and boosting margins at its learning centres across China.

Home Inns & Hotels Management (HMIN:Nasdaq)

The budget hotel operator is ramping up expansion across China following strong performance at its hotels in lower tier cities this year.

Dollar weakness continues to shape investment flows

Brazil and Russia equities saw an uptick in inflows last week, while Asia-ex Japan and Greater China funds fell out of favour with investors, EPFR Global reported.

Consumption: the catchword of 2010

The government has pledged to focus on boosting consumer spending next year through driving urbanisation and continuing preferential tax initiatives.

Urbanisation galvanises lower tier cities

China's engine of growth derives increasingly from fourth tier cities.

Heyuan – Riding on the Pearl River

Inland Guangdong provincial city expands its urban area by 4.8% a year.

Jingzhou – The slower lane

A middling city in middle China experiences average urban area growth of 4.5% a year.

Ordos – An empty city on the steppe

Will a whole new, almost empty 32 sq km city in this coal boomtown ever fill up?

Shouguang – Rapid urban expansion

Intensive agriculture, logistics and heavy industry drive urban expansion this year of over 10%.

Jinjiang – Cradle of domestic brands

The rise of domestic brands generates wealth, driving an urban area expansion of between 5% and 10% a year.

Shuangliu – Urbanising the countryside

Instead of migrating to the city, residents of Shuangliu are creating the trappings of urban life in the countryside.

Fangchenggang – A port facing Asia

Plans for steel and nuclear power plants, plus busy ties with Vietnam, power an expansion in urban area of 24% this year alone.

China and climate change pledges

Chinese scholars debate China's ambitious pledge to cut carbon emissions by 40%-45% by 2020.

Is growth set to slow next year?

What are China's economists expecting in terms of 2010 economic growth?