China’s first Parkson Department Store in Beijing, located at the Parkson Fengxing Gate, is set to officially close by the end of this year. The landmark, which once represented the entry of foreign capital into the Chinese market, is bowing out after over thirty years of operation due to sustained losses. Scholars point out that this signifies the end of a prosperous era.
Parkson Group recently announced that its subsidiary, Parkson Commercial Development Co., Ltd., will terminate its leasing agreement with China National Arts & Crafts Group ahead of schedule, involving an area of approximately 17,240 square meters, with the termination date set for January 1, 2026. This means that Parkson at Fengxing Gate will shut down by the end of 2025. The announcement bluntly stated that the mall has been operating at a loss for many years and is no longer sustainable.
Since its establishment in 1994, Parkson has been a benchmark in Beijing’s retail industry with its mix of foreign brands and modern operational model, considered a typical case of Sino-foreign joint ventures in commercial business post the “reform and opening-up” period. A Beijing resident, Mr. Lu, reminisced during an interview with a journalist on August 27th, saying, “Parkson was as well-known as McDonald’s in the 90s. I used to shop there frequently for its diverse range of products compared to Xidan Shopping Mall and Beijing Wangfujing Department Store, and they were more guaranteed. Hearing about the closure of the Fengxing Gate store, I can’t help but feel regretful.”
However, despite numerous renovations, Parkson failed to reverse its decline amidst the rise of e-commerce platforms and fierce competition in the industry. Mr. Lu stated, “Nowadays, you hardly see people in many malls, there are more salespeople than customers.”
The fate of Parkson at Fengxing Gate is not an isolated case. On August 19th, Joy City Holdings announced its withdrawal from the Changsha Beichen Delta Project in September, renaming the original mall to “Beichen Collection,” signifying its complete exit from the Hunan market. At the same time, Yintai Group faced cash flow pressure and had also withdrawn from projects such as “The Box Chaowai” in Beijing and “TX Huaihai” in Shanghai.
Industry insiders in the mainland believe that these withdrawals indicate even major developers are struggling to withstand weak consumer demand and financial pressure.
In major mainland cities like Shenzhen, which is adjacent to Hong Kong, the retail sector is facing similar challenges. According to industry estimates, Shenzhen currently has over 200 shopping centers, but less than 10% of them are able to maintain stable profits. Some medium-sized malls are experiencing high vacancy rates, and rents are being forced down, leading to a deteriorating business environment.
Facing the reality of a slump in commercial real estate and consumer spending, Chinese Minister of Commerce, Wang Wentao, admitted on July 18th during a press conference that China’s consumption situation in the next five years remains complex. He stated that authorities will “targetedly introduce measures to stimulate commodity consumption and unleash service consumption potential.” The official forecast suggests that the total retail sales of social consumption in 2025 are expected to exceed 50 trillion yuan. However, low market confidence and declining household income cast uncertainties over this target.
A former teacher from Peking University, Mr. Zheng, pointed out during an interview that the root cause of mall downturns is insufficient purchasing power. He said to the reporter, “Wealth is overly concentrated, with the vast majority having limited bank savings. This trend was evident as early as 2018 and with the current poorer job prospects, ordinary people are hesitant to spend. High-income white-collar workers are mostly leaving the country, leaving behind those facing pay cuts or layoffs. How can they dare to spend more?”
He added that after returning from a trip to Shanghai, he personally experienced consumption contraction: “Several malls along Huaihai Road saw significantly fewer visitors compared to before the pandemic, and there were very few foreign tourists. Even with new stimulus policies from the government, if residents don’t have stable income, it’s challenging to see results.”
International media is also paying attention to the weakness in China’s retail sector. The Associated Press and the Financial Times of the UK point out that although short-term retail sales still have some support, the continuing downturn in manufacturing, exports, and real estate is dragging down the overall economy. Data shows a 10.7% drop in real estate investment in the first five months of 2025, with new housing prices continuing to decline, and consumer confidence slow to recover.
Industry experts in Beijing and Shanghai believe that the mainland commercial real estate market is currently facing dual challenges: the impact of e-commerce and new retail is making traditional department stores and shopping centers lose their competitive edge, while economic downturn and cautious consumer spending lead to insufficient mall foot traffic and difficulty for tenants to make profit, triggering a wave of closures.
Mr. Zheng concluded by saying that the closure of Parkson at Fengxing Gate is not just the dim finale of foreign department stores in China, but also serves as a warning. “Without a resurgence in consumer spending, it will be difficult for the retail industry to recover. From Parkson to Joy City to Yintai, these cases of withdrawal indicate that the mainland commercial real estate and physical retail are accelerating into an elimination phase.”
Market observers generally believe that the future of commercial real estate in China will exhibit a “Matthew effect”: large enterprises may maintain operations through resource integration and innovative scenes, while small and medium-sized malls without distinctive features and capital support will face even greater risk of elimination. If physical retail cannot break through in experiences and services, it may struggle to find a foothold in the new economic environment.