Beijing, Shanghai and Wuxi are all being targeted by Europe's IICG

SHANGHAI - Inter Ikea Center Group (IICG), one of Europe's leading developers of shopping centers, is launching a 5 billion yuan ($781 million) project in Shanghai.

"It is part of IICG's expansion strategy in the Chinese market, which is expected to cost more than 15 billion yuan during the next five years and more," said Ding Hui, managing director of IICG China.

Of that investment, 10 billion yuan will be spent on three projects: one in Wuxi of Jiangsu province; a second in Wuhan of Hubei province; and a third in Beijing.

The investment does not include funds from Ikea Group, although the Swedish furniture giant will invest in construction of a store in each of the shopping centers, said Ding.

IICG, established in 2001 and based in Kastrup, Denmark, is jointly owned by the Inter Ikea Group, which has a share of 51 percent, and Ikea Group, which holds the remaining 49 percent.

IICG now operates 30 shopping centers in 14 countries worldwide, managing more than 1 million square meters of retail business area. Over the next couple of years, the company will continue to increase its portfolio, and already has 15 more projects in the pipeline, said IICG's Chief Executive Officer John Tegner.

IICG hosted a ground breaking ceremony in Wuxi on Tuesday and started construction of the company's first project in China.

The Wuxi shopping center, costing more than 300 million euros ($422 million), marks an important moment in IICG's history, said Tegner.

"We look forward to giving the people of the Wuxi area a shopping and entertainment destination that will have something for everyone," he said.

The center, which will boast 140,000 square meters, 400 shops and 5,800 parking spaces, will open for business in 2013. Of the other two projects, Beijing will open in 2014, with Wuhan becoming operational in 2015.

Famous brands that have signed contracts to open shops at the Wixi center include IKEA, Groupe Auchan SA, Suning Appliance Co Ltd and the Jinyi International Cinema chain, said Ding.

"We are committed to developing the Chinese retail market. As the middle class continues to grow, consumers are demanding more from their shopping environments," said Tegner.

"They want both a one-stop shopping center and a destination where the entire family can spend time, relax and have fun together."

Ding said the planned Shanghai project will be on the same scale as that in Beijing, with investment of about 5 billion yuan and a business area of 210,000 square meters.

IICG has approved an investment plan for the Shanghai center and has set up a team to survey the local market and choose a suitable location, he said.

"Once we obtain the land for it, the project can be completed within four years," he said.

Ding confirmed that China is a strategic market for IICG, although established rivals mean it is marked by fierce competition.

The landscape of retailing in China is changing quickly as the country develops. "The key changes are now happening in second- and third-tier cities," said Ding.

"Our strategy is to work with local governments and together be a part of the development not only of the shopping center, but also the city," said Ding.

IICG will continue to seek investment opportunities for shopping centers in Chinese cities which register fast economic growth, he said.

"We will continue to invest in China to lead the retail development in the cities where we want to establish our centers," Tegner added.

China Daily

(China Daily 09/08/2011 page15)