Observations from Shanghai

Leo Wealth

Aleksey Mironenko

I spent the last 4 days in Shanghai.  Due to COVID, it has been over 5 years since my last visit and I was keen to take a look and experience things firsthand.  I saw a few expat clients and friends based in Shanghai, visited a few companies, and walked the streets.  This is a longer note than usual, but I thought it might be useful to those of you interested but unable to make a similar trip yourself.  Here’s what I learned:

On the Streets

  • It is clean and quiet. The pollution of 5-10 years ago was gone.  I don’t know if that’s the new normal or just a nice week, but the air was better than on almost all my past trips.  Also, the city is shockingly quiet due to the lack of combustion engine noises.  Say what you want about electric vehicles, but they make high-density cities and streets a lot more pleasant. 
  • Speaking of Chinese cars. Mid-tier European manufacturers and probably some American ones are finished. Global leaders will adapt and compete just fine (Ford survived Toyota) but there will certainly be failures and/or consolidation.  Using Didi (China’s Uber), I rode in a few new cars from brands I’ve never heard of and all of them were excellent.  Chinese buyers don’t want last year’s model given how much better the new one is, so car companies have no choice but to export to markets that don’t yet have the latest and greatest.
  • Delivery mopeds are everywhere. China’s foremost tier 1 city now resembles the streets of Ho Chih Minh or Hanoi and probably rivals them for the number of mopeds.  Chinese consumers were quick to change behavior with the advent of delivery companies and now don’t tolerate waiting more than 30 minutes or going to a brick-and-mortar store (gasp!) for even the smallest of orders.  The gig economy is booming and millions of people have found new employment in a period of sluggish economic growth.
  • The traffic is still awful. For some reason, with all the economic difficulties, I thought there would be less traffic.  Sadly for my itinerary, that just wasn’t the case. Rush hour was as bad as any major city because all the public transport infrastructure growth was negated by people’s desire for car ownership on the back of rising wealth.
  • Fewer, but not zero, foreigners. Compared to 10-15 years ago, there were fewer foreigners. But, to be honest, the dearth of Western faces wasn’t nearly as obvious as I anticipated. The foreigner-friendly bars and restaurants were full.  There are many Chinese Americans in the city who don’t seem foreign from a distance but are perfectly happy in Shanghai.  There were plenty of foreign tourists walking around the main parts of town.
  • Tons of domestic tourists. The main way I could tell there are fewer foreigners was through sport. The only foreigner-operated rowing club shut down during COVID, presumably due to lack of members. And on my morning runs, instead of seeing a few foreigners here and there like in years past, I mainly saw domestic tourists.  Tons of them, from all over China, walking around and taking pictures as early as 7 am.
  • Small signs of local innovation everywhere. At the airport, instead of written instructions in multiple languages at the photo/fingerprint scans, the machine speaks instructions in the national language of your passport.  When stopped, one of the local brand cars uses its 360-degree cameras to tell you if it’s safe to open the door.  No one at all uses cash – getting rid of my 5-year-old notes and coins was nearly impossible.  Even the rowing club I eventually found had its own payment QR code. The main systems are now connected with e-wallets of neighboring Asian countries to make life easier for visitors.

From Friends and Clients

  • Foreign business is starting to bounce back. The number of exhibitions held in Shanghai is nearly back to 2019 levels.  The number of foreign attendees, who are catching up after 3 years away, has already surpassed pre-pandemic levels.  Hotel rooms are full not just with tourists, but also business travelers. The local government is actively supporting new business setups, both local and foreign.
  • Hotels are full. Inbound tourism is picking up and you can tell by the hotels.  Mine was 90% occupancy this week and the one next door had no rooms left at all.
  • Just like Hong Kong, people are moving back in.  While there’s no question that foreigners left both Hong Kong and Shanghai over the last few years, the trend has definitely reversed.  Initially, new arrivals were young and single, but now there are families arriving for new job postings as well.  A client mentioned seeing more foreign executives on job postings in Shanghai again. A friend described her foreigner-friendly residential complex as being full once again.  The prices of those apartments did not seem distressed at all.
  • Most like the lifestyle but worry about geopolitics. Expats who stayed cite convenience, ease of living, low costs, and a good comfortable lifestyle overall.  Much like Hong Kong, if you made it this far, you’re probably staying for good.  Still, one friend is buying an apartment in Tokyo “just in case”.  Another got an alternate passport but has no plans to use it unless “things really get out of hand”.
  • What does the average person think? I couldn’t tell you.  There are two almost separate world views co-existing in Shanghai: English speakers with access to VPNs and thus foreign news, and everyone else.  I must acknowledge my limitations and inability to ask the second group any real questions.  But secondhand, what I hear is confusion about why our governments can’t just figure out a way to get along for the greater good of all around.

From Companies

Apologies for not mentioning specific companies – it’s easier compliance-wise and for future meetings.

  • Economic recovery is starting, albeit slowly. Business was bad late last year and in January and February. Domestic demand was basically non-existent. But March was better and April was better again. Off a low base, but no longer freefall and no longer flat. Consumers are starting to spend again.
  • High end vs low end. Luxury malls still have lower traffic but mid-level traffic is clearly rising.  People are recovering from the COVID lockdown shock and are starting to spend again, but they are clearly value-conscious. Given the choice between a foreign high-end good or a local almost good enough but cheaper item, the decision is almost always in favor of China-made.
  • Tier 2 and 3 destinations are growing. Consumers are choosing to travel to further afield local destinations due to novelty and cost savings. So while there were plenty of tourists in Shanghai, many Shanghai residents are going to local villages instead of other big cities or abroad. Any company that thought ahead and targeted tier 2 and 3 locations instead of tier 1 cities is well-placed to reap the rewards.
  • Competition is fierce. In non-sensitive areas, it is unbridled capitalism. One intersection had an Apple store on one corner, a Xiaomi store on another, Adidas on the third, and Anta on the fourth.  Interestingly, the 2 Western stores were modern and glass while the 2 Chinese designs almost resembled the aesthetics of old New York. Luckin, Manner and Starbucks coffee shops are everywhere, often within meters of each other.  Plenty of Apple phones everywhere.
  • Global is not for everyone. We’ve all heard stories of Alibaba, Tencent, BYD, and others who are going global.  But there are plenty of very large Chinese firms that think their domestic market is big enough and easier for them to grow in.  They look at geopolitics and the complexity of the world and are content with staying local. Their clients are Chinese, their owners are Chinese and their vendors are Chinese. As a result, they move faster than most foreign competitors and even some of the long-established players who have a global focus.


The information provided is for educational purposes only. The views expressed here are those of the author and may not represent the views of Leo Wealth. Neither Leo Wealth nor the author makes any warranty or representation as to this information’s accuracy, completeness, or reliability. Please be advised that this content may contain errors, is subject to revision at all times, and should not be relied upon for any purpose. Under no circumstances shall Leo Wealth be liable to you or anyone else for damage stemming from the use or misuse of this information. Neither Leo Wealth nor the author offers legal or tax advice. Please consult the appropriate professional regarding your individual circumstance. Past performance is no guarantee of future results.

This material represents an assessment of the market and economic environment at a specific point in time. It is not intended to be a forecast of future events or a guarantee of future results.

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