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China’s Mega Clusters. Qingdao Should Be No Shocker.

By Dan Harris on Posted in China Business, Recommended Reading

If you are not reading the McKinsey Quarterly, you should be. It is an absolutely superb source of information regarding China and, in particular, China as market. It is consistently one of (if not the) best sources for free in-depth analysis of the China market.  

One of its recent issues has an article, entitled, “Is your emerging-market strategy local enough?” [free registration may be required]  Its subtitle explains the article: The diversity and dynamism of China, india, and Brazil defy any one-size-fits-all approach. But by targeting city clusters within them, companies can seize growth opportunities. The article then goes on to analyze and discuss China’s “22 distinct urban clusters,” dividing them between “mega,” “large” and small. The following seven qualified as mega:

  1.  Beijing-Tianjin-Shijiazhuang
  2.  Qingdao-Jinan
  3.  Nanjing
  4.  Shanghai
  5.  Hangzhou
  6.  Guangzhou
  7.  Shenzhen

I like this approach. A lot. For more on it, you can also check out this Harvard Business Review article by the same authors, entitled, “A Better Approach to China’s Markets.“ 

What do you think?

  • James G

    That seems very sound and reasonable. Just as here in the states there would be a big variation between cities, China would of course be the same. This is the sort of thing I like, people looking past “monolithic China” and regionalizing things. One billion customers for your product may not be likely for all brands, but millions of potential customers in a region sounds very reasonable.

  • http://www.v-coffee.com Benjamin

    Very good point.
    But I don’t get it. Why is Beijing included with Tianjin (140km from Beijing) and Shijiazhuang (320km) while Hangzhou (170km from Shanghai) and Nanjing (300km) are on their own…
    Also Exhibit 2 shows Nanjing as a LARGE and not MEGA cluster while Exhibit 1 shows it as mega.
    Or maybe I’m just not focusing enough on the mega picture :)

  • wotingyu

    The HBR graphic is pretty looking, but I take issue with how they gloss over things–e.g. Shenzhen v. Guangzhou. I lived in Shenzhen and while it is obviously largely true that it is a city of transplants who rely on mandarin as a common denominator whereas Guangzhou is more “cantonese,” this ignores the significant number of non-Guangdong migrants in Guangzhou. Also…you need to spare me the simplification of Guangzhou being a place where families eat in restaurants vs. Shenzhen being a place where friends go to bars.

  • nulle

    I get the Beijing and Tianjin as a cluster…but Shjijazhuang with Beijing is pushing it. Has anyone consider Chengdu and Chongqing as a cluster since they are the 2nd largest city in China??

  • Volker Müller

    i also don’t aggree to put jinan and qingdao in one cluster.
    jinan-based companies in general perform poorly in eastern shandong and qingdao-based companies in general don’t do well in western parts of the province, these are disjunct markets.
    i would go one step further: there are provinces in china (e.g. henan) with one distinct centre (zhengzhou). outside zhengzhou henan is basically countryside or backward industry. a relation similar to france and paris.
    shandong on the other hand is a multi-centre province. jinan and qingdao are somewhat prominent, but many of the other cities (dezhou, rizhao, weifang, weihai, yantai, zibo) are a centre in its own.
    if a company is looking for a distributor in henan, a good partner in zhengzhou will be able to cover whole henan. in shandong it may be a better choice to have 10 smaller distributors.