CHINA’S growing middle class has proven to be a gold mine for listed mall operator SM Prime Holdings, Inc. as it now taps into the Chinese consumer’s upper-middle market, moving up the value chain of the Chinese retail market.

With a bigger earning capacity and craving for a new mall experience, this growing middle class remains an untapped market.

‘Middle class … earning more money are getting stronger and are wanting to get more out of life. They want better brand, service,’ according to SM Prime’s Marcus Dee, mall manager of the upper-middle market middle mall Lifestyle in Xiamen City.

‘There’s a big gap in the purchasing power of the mass market and the middle high market,’ Dee added, noting the company’s experience since opening Lifestyle.

SM Lifestyle is a 110,000 sqm, upper-middle market-targeting mall of SM. Since its launch last year, it has carried brands like Haagen-Dazs, GAP and Zara, among others — brands which are not found in the standard SM malls of the company.

Sales of major tenants continue to increase which as of last monitoring in July surged at an average of 35-45 percent, on a month on month basis. SM Lifestyle has already gone through an expansion which was unveiled in September this year.

SM Prime sees a lot of promise in the market of the upper-middle class.

Long been heralded as a potential growth market by consumer products, with much of global firms moving into the territory, it has allowed for a new generation of Chinese citizens to get a cut of the benefits brought by the new investments coming into the country.

Juan Jose F. Sibal, SM Prime’s assistant vice president for its China operations, noted that the upper-middle market earns an income way above the local government set minimum wage, which in the case of Xiamen stands at RMB 2,500 per month.

Income threshold for the upper-middle class is estimated to stand between RMB 10,000 to RMB 12,000. The upper-middle class works, at the least, as mid-level manager in companies, whose salary also increases as job responsibilities increase.

Currently, there is an expectation that China’s wage will further increase as the Chinese government allows workers to air grievances of working conditions and compensations to their bosses.

‘A (common) Chinese shopper wouldn’t spend over 500 RMB. But here when they go to Zara, they spend 800 RMB to 1,000 RMB… (And in the case of) Haagen Dazs… they bring their dates here and once they are done with it, the bill goes to 1,000 RMB,’ noted Dee.

Dee also noted that the purchasing power (of upper middle) ‘is really good’ which with the market’s demand for improved service has allowed SM Prime to bank on its years of experience of nurturing the Philippine ‘malling’ experience since SM City North EDSA opened in 1985.

This experience has led to the establishment of known malls like SM Megamall and the flagship SM Mall of Asia in Manila.

‘And what they like about this mall (Lifestyle) is that the environment is very different. When you get into other local malls, you don’t have wide spaces like this… Many Chinese malls, are usually chaotic, but here in Lifestyle, you have a very serene (environment),’ Dee said.

‘It’s like when they come here they are conditioned to feel that ‘oh I am in a high-end place.’ So there’s a mission to really spend more. When they come, we also make them feel like spending…. we have to make sure that they have the experience,’ he added.

Dee noted that for well-to-do Chinese consumers appreciate the need to sustain one’s status through material acquisition, buying something as a ‘status symbol.’

‘They are very status conscious. So they’ll buy something because it is expensive, nobody has it before, and it’s new,’ he said.

‘So this is the common proposition that SM is offering to the market and so when we bring in something new, then we believe that the upper middle will come and buy,’ he added, noting further that SM Lifestyle is the only mall in the whole Fujian province to carry the clothing brand of Zara.

Xiamen City is found in Fujian Province.

SM Prime plans to expand SM Lifestyle anew which is being eyed for construction by next year.

Diane R. Dionisio, SM Prime assistant vice president for finance for China projects, said that they still have 33,000 sqm. of available space for the expansion.

Dionisio however declined to reveal the development cost of the expansion, citing that the expansion’s plan has yet to be completed.