Skip to main content

World's biggest mall a China 'ghost town'

By Johan Nylander, for CNN
updated 11:27 PM EST, Sat March 9, 2013
The New South China Mall is filled with palm-trees, cafés, canals and leisure facilities - but few customers. The mall has capacity for 2,350 stores, yet after eight years is considered a "dead mall." The New South China Mall is filled with palm-trees, cafés, canals and leisure facilities - but few customers. The mall has capacity for 2,350 stores, yet after eight years is considered a "dead mall."
HIDE CAPTION
A walk through a ghost mall
A walk through a ghost mall
A walk through a ghost mall
A walk through a ghost mall
A walk through a ghost mall
A walk through a ghost mall
<<
<
1
2
3
4
5
6
>
>>
STORY HIGHLIGHTS
  • The New South China Mall in Guangdong Province is the world's largest mall
  • But since its opening in 2005, few tenants and customers have come to the store
  • "Most of it empty, with little consumer traffic and a high vacancy rate ... a 'dead mall'"
  • China littered with"ghost towns," empty commercial spaces built in speculative boom

Dongguan, China (CNN) -- They built it, but the shoppers didn't come.

New South China Mall in Guangdong Province opened in 2005. With 5 million square feet of shopping area, the mall can accommodate 2,350 stores, making it the largest shopping center in the world in terms of leasable space -- more than twice the size of Mall of America, the biggest shopping center in the United States.

At the outdoor plaza, hundreds of palm-trees blend with a replica Arc de Triomphe, a giant Egyptian sphinx, fountains and long-stretching canals with gondolas.

Only problem is, the mall is virtually deserted. Despite the bombastic design and grand plans, only a handful of stores are occupied. "Most of it empty, with little consumer traffic and a high vacancy rate," according to a report last year by Emporis, a global building data firm. "It has been classified as a 'dead mall.'"

Walking among shattered shops -- its dusty corridors and escalators covered in soiled sheets -- is a walk through a ghost mall. Rubbish piles up along the sides, paint is coming off the walls and store signs and advertisements have faded.

The mall's indoor amusement park, staff lay half asleep over counters or kill time chatting with each other while the 1,814-foot rollercoaster roars above.

On China: Chinese cinema boom
Politician throws computers at airport
A new town, with few residents
20% of houses in Spain sit empty

Opened for the public in 2005, developers expected to attract some 100,000 visitors a day. But eight years later, the few people that visit the mall today typically hang out at the American fast food restaurants near the entrance or at the IMAX cinema outside the mall. Some parents bring their children to the Teletubbies Edutainment Center.

Part of the problem is location. Dongguan is a factory town and most of its almost 10 million inhabitants are migrant workers struggling to make ends meet. "People coming here to work in factories don't have the time or the money for shopping or the rollercoaster," said a migrant worker in his 20s, surnamed Xiao, who works at the mall.

The deserted mall is also a symbol of China's rapid urbanization and runaway investment in real estate projects, where massive development projects have been given the go ahead without proper marketing and business research.

"To me, many of these projects are a result of easy access to capital and a combination of wishful thinking and speculative behavior rather than rational business calculations," said Victor Teo, assistant professor at the University of Hong Kong.

"This mall is not the only one that is like that. Elsewhere in China there is the phenomenon of 'Ghost Towns', that is to say infrastructure projects, both residential and commercial, with no takers."

The credit boom of post-financial crisis stimulus has resulted in a proliferation of empty commercial developments and apartments built on rampant speculation. Yet why is the Chinese economy still moving at a brisk 7% to 8% growth rate?

"What China did in the stimulus credit boom is create a lot of `ghost cities': projects without a strong commercial foundation, and projects that didn't get done," wrote Jonathan Anderson in a research note entitled "Hurray for Ghost Cities" from Emerging Advisors Group last month. "What happens next?

"In most of the economy ... nothing. You haven't created a lot of new productive capacity; you're not driving down profits and returns in manufacturing and services, and you've left plenty of room for a rebound in the market-oriented property space.

"Rather, for all intents and purposes you just took the money and poured it down a black hole," Anderson wrote. And the Chinese banking system "has surprisingly little trouble absorbing that bad debt."

But while the macroeconomic juggernaut of China marches on, there remain regional areas of woe. Dongguan is facing mounting problems as factories close down and manufacturing moves to other cities in China and abroad which offer cheaper labor.

Still, the mall has plans to boost the number of tenants, said Ye Ji Ning, head of New South China Mall's investment unit. He claims the mall has a 20% occupancy rate measured by commercial area, although Ye declined to give specifics when challenged on that number. The company's goal is to increase occupancy to 80% in 2013, he said.

"From March onwards we will have big promotional activities in order to reach our new leasing targets," Ye said.

It's not the first time the owners try to blow life into the sleeping giant. The mall was initially headed by Dongguan native Alex Hu Guirong, who became a billionaire in the instant noodle business, and later sold to the Founders Group, a conglomerate set up by Peking University.

In a 2007 relaunch, the mall changed name from "South China Mall" to "New South China Mall, Living City" and a revitalization plan was drawn up. But after the relaunch, neither shoppers nor tenants came.

ADVERTISEMENT
Part of complete coverage on
updated 7:13 AM EDT, Fri October 17, 2014
A smuggler in Dandong, a Chinese border town near North Korea, tells CNN about the underground trade with North Korean soldiers
updated 2:54 AM EDT, Fri October 17, 2014
Yenn Wong got quite a surprise one morning earlier this month when she found out an exact copy of her Hong Kong restaurant had opened in China.
updated 11:15 PM EDT, Tue October 14, 2014
When I first came across a "virtual lover" service on e-commerce site Taobao, China's version of Amazon, I thought it was hype.
updated 9:15 AM EDT, Tue October 14, 2014
Each year Yi Jiefeng does what she can to stop China turning into a desert.
updated 10:54 AM EDT, Mon October 13, 2014
As its relationship with the West worsen, Russia is pivoting east in an attempt to secure business with China.
updated 10:29 PM EDT, Tue October 7, 2014
Aspiring Chinese comics performing in Shanghai's underground comedy scene hope to bring stand-up to the masses.
updated 12:54 PM EDT, Tue September 30, 2014
Liu Wen is one of the world's highest-paid models and the first Chinese face to crack the top five in Forbes' annual list of top earners.
updated 7:44 AM EDT, Fri October 3, 2014
Cunning wolf? Working class hero? Or bland Beijing loyalist? C.Y. Leung was a relative unknown when he came to power in 2012.
updated 7:25 AM EDT, Thu October 2, 2014
 A man uses his smartphone on July 16, 2014 in Tokyo, Japan. Only 53.5% of Japanese owned smartphones in March, according to a white paper released by the Ministry of Communications on July 15, 2014. The survey of a thousand participants each from Japan, the U.S., Britain, France, South Korea and Singapore, demonstrated that Japan had the fewest rate of the six; Singapore had the highest at 93.1%, followed by South Korea at 88.7%, UK at 80%, and France at 71.6%, and U.S. at 69.6% in the U.S. On the other hand, Japan had the highest percentage of regular mobile phone owners with 28.7%. (Photo by Atsushi Tomura/Getty Images)
App hopes to help those seeking a way out of China's overstrained public health system.
updated 8:20 PM EDT, Thu October 2, 2014
Yards from pro-democracy protests, stands the Hong Kong garrison of the People's Liberation Army (PLA), China's armed forces.
updated 7:23 AM EDT, Thu October 2, 2014
The massive street rallies that have swept Hong Kong present a major dilemma for China's leadership.
updated 3:07 AM EDT, Sat September 27, 2014
Chinese wine drinkers need to develop a taste for the cheap stuff, not just premium red wines like Lafite.
updated 9:09 PM EDT, Tue September 23, 2014
The Dalai Lama, Tibet's spiritual leader, set off a media kerfuffle this month when he spoke about his next reincarnation.
updated 10:18 AM EDT, Sun September 28, 2014
He's one of the fieriest political activists in Hong Kong — he's been called an "extremist" by China's state-run media — and he's not old enough to drive.
updated 10:57 PM EDT, Mon September 22, 2014
China has no wine-making tradition but the country now uncorks more bottles of red than any other.
updated 5:29 AM EDT, Tue September 16, 2014
Christians in eastern China keep watch in Wenzhou, where authorities have demolished churches and removed crosses.
updated 1:38 AM EDT, Wed September 10, 2014
Home-grown hip-hop appeals to a younger generation but its popularity has not translated into record deals and profits for budding rap artists.
ADVERTISEMENT