Through Malaysia’s Lion Group, Hong Kong-listed retailer Parkson Retail Group plans to expand into more third- and lower-tier Chinese cities, developing small- to medium-sized urban residential and commercial complexes.

This was announced by executive chairman William Cheng on the eve of the opening of Lion Mall in Qingdao, the group’s first comprehensive shopping mall in China.

Parkson has closed more than 10 stores in large Chinese cities over the past five years, opening new stores in third- and lower-tier cities.

Cheng said it was a “must” to change the retail group’s footprint in China and transform business models, with conventional department stores facing challenges and pressures in the past few years. A “natural trend” was for department stores to evolve into shopping malls with retail, food and beverage, entertainment and boutique grocery stores.

He said membership schemes would also expand in China along with Parkson’s growth.

Lion Group has built five lifestyle shopping malls in Malaysia and owns eight in China and one in Vietnam. Two other malls are under construction, in Melaka, China, and in Phnom Penh.