China faces shopping mall dilemma

The first closing of an Apple Store in mainland China hints at broader troubles facing the country’s shopping malls as developers open more of them despite a glut, writes Keith Bradsher from Dalian, China

- Keith Bradsher

There’s nothing China can’t make in abundance and often in excess — even shopping malls.

Across the United States, 1 in 6 shopping malls has closed since the sector peaked in 2013. But China has been on a frenetic construction boom, with its number of malls doubling since 2013 to 6,700.

Many retailers in China are now feeling the consequences of that overbuilding. While some Chinese malls are thriving, others are withering from lack of customer traffic.

Apple this month closed its store in the InTime City mall in Dalian, a port city in northeastern China. It was a first for Apple in the country, where the tech giant operates dozens of retail locations. Apple's second store in Dalian, at the Olympia 66 mall just 1.6 miles away, has remained open and even taken on employees from the defunct store.

All over the world, shopping malls are wilting under fierce competition from e-commerce. The competition is especially fierce in China, where home delivery is particularly cheap and convenient. An estimated 10 million people work in delivery, many on electric scooters, but some are starting to use self-driving trucks and even drones.

The real problem in China's shopping mall sector, as it is in much of China's real estate sector, is years of frenetic, debt-fuelled construction. Developers have continued a building blitz despite a sharp slowdown in retail sales that started during the Covid-19 pandemic and has continued since.