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Q: What kind of policies can be implemented to facilitate a transition to a consumer economy?
I look at the new malls etc around the city I'm living in and wonder what on earth is wrong with the thinking of the people who've built so many of these monstrosities.
I always ask myself what kind of person would open a shop knowing that they're never going to get any customers. The average salary in my city is about 4000rmb per month and those who can afford to buy gucci, chanel, prada etc, aren't going to buy it on the Chinese mainland.
Do the proprietors of the gucci stores only open such a store so they can brag to their friends about the quality of the goods they're selling? I'll bet anyone who asks questions about turnover is never invited back to sit around the lazy susan and ganbei the evenings away...
If this is the case, how could things be changed so that people sit around bragging about opening some kind of Chinese equivalent of Walmart which sells things to the huge swathes of poor people out there and therefore actually returns the investment in building shopping malls in the first place.
Going by what I've seen, this problem I've described to you is cultural. Is it even possible to change people's thinking here? I think that's impossible given the herd mentality and the power of mianzi.
9 years 7 weeks ago in Money & Banking - China
There is no middle ground. Its either mega expensive or mega cheap. Its BYD or BMW 7 series. No BMW 3 series to be seen. Its consumerism with Chinese charataristics.
Hotwater:
I've seen 3-series around, in fact I drive a 320. A Lifan 320!
laowaigentleman:
That's why I'm always confused when people are saying the Chinese government is trying to create a transition.
What on earth can they possibly do to change the sort of mindset you're describing?
ScotsAlan:
It comes down to quality standards. Pay low... get shit. Pay high... get good. Pay middle....is it good or bad? Probably a copy. So may as well pay low. Hence no middle ground. Its either top or bottom. The retailers know this, and retail accordingly.
dongbeiren:
With cars I'd say a big part of that is that in urban China car is usually a luxury rather than a necessity - so people with enough disposable income to buy a car can generally afford a nice one. I'm guessing most of those BYDs are being driven by people who really need a car because public transportation can't get them to work efficiently. It's different in western countries where cars are often a necessity so the cars on the road reflect all income levels. The fancy BMWS are being driven by people who drive them because they can and want everyone to see that they can.
ScotsAlan:
BYDs are driven by the people who win the number plate lottery. Bmws are driven by the people who can afford them. The little 35000rmb vans are driven by the people who need to drive for their living.
dongbeiren:
I guess I just don't see why someone would buy a crappy car unless they really needed one to get around day to day. I mean, the costs of maintaining it are greater than the costs of taking taxis around unless the person works far away. Plus you have to deal with Chinese driving.... I just tend to assume that most cars in Chinese cities are being driven more for face then necessity given the public transportation options and taxis that are readily available.
ScotsAlan:
People drive cars because they want to move from A to B as quickly as possible. Of course, everyone wants to do that. Cars have fucked up the world. Work here... but live there.... no problem. Buy a car. The bankers payrolled the car makers so they could charge interest on the car loans.
Hotwater:
My crappy little Lifan 320 (a Mini Cooper style copy) was 45000 on the road new. Normal maintenance is cheap (400-500 for a service, 1600 every 1.5 years for tyres, insurance just under 3000/year). It came with a general 2 year warranty (5 years on the engine!) & though it had some small issues in the first year (just like a 1970's British Mini had!) it's been and still is a great little motor. I bought it to get to work at first (instead of 2 bus journeys to work) but now love the freedom it affords me at weekends to drive to small obscure places in Guangdong. Drove from GZ to Yangshou not long ago & it was a great ride.
I mi do agree with what others have written...the bigger cars are generally for face whereas the smaller, cheaper cars are for necessity. I prefer cheap rather than face!
I have to agree that the mega mall idea is dying, if not dead. Look at the malls in America. So many are wasteland or converted to multi-purpose used space. I think, in the end, that is what will become of these malls here in China. They would make great schools and universities. In Nashville, Tennessee, one of our old malls was converted into a medical center. Nearly every kind of medical clinic can be found there. Another mall has been converted into a libary, community college, community center and other things. As a result, some of the retail stores have been repurposed into Chique retail shops and coffee shops. I Chinese mall operators like Wanda will repurpose these failed ventures and come out with a winning solution.
The problem in China is that everyone wants to copy each other. How many bakeries on one block do you need? How many jewlery stores, markets, hair cutting shops and noodle restaurants are needed? All these stores are the same too, with the same merchandise. No one seems to understand the concept of marketing and setting themselves apart from the competition. Yes, it is a cultural thing. It is the Chinese way. In my city, there is a KFC on one side of the city center park and another KFC on the opposite side. Dico's has done something similar in our town.
For a country that tries so hard to emulate western success in business, they really fall short of really studying our successes. They fail to look at our business models and our operations. The number one rule of business: "location, location, location" seems to fall flat here.And, how many employees do you need to stand around all day in a jewlery store? Apparently a half dozen. It is amazing to me the waste fo money they have in stores regarding the number one expense to a business....salaries. And then you face the Wal-Mart syndrome in grocery stores. You have an employee for every aisle of the store. You go to check out and there is a long line of people trying to check-out. And only two registers of the ten in operation. Ugghhh.
There is no middle ground. Its either mega expensive or mega cheap. Its BYD or BMW 7 series. No BMW 3 series to be seen. Its consumerism with Chinese charataristics.
Hotwater:
I've seen 3-series around, in fact I drive a 320. A Lifan 320!
laowaigentleman:
That's why I'm always confused when people are saying the Chinese government is trying to create a transition.
What on earth can they possibly do to change the sort of mindset you're describing?
ScotsAlan:
It comes down to quality standards. Pay low... get shit. Pay high... get good. Pay middle....is it good or bad? Probably a copy. So may as well pay low. Hence no middle ground. Its either top or bottom. The retailers know this, and retail accordingly.
dongbeiren:
With cars I'd say a big part of that is that in urban China car is usually a luxury rather than a necessity - so people with enough disposable income to buy a car can generally afford a nice one. I'm guessing most of those BYDs are being driven by people who really need a car because public transportation can't get them to work efficiently. It's different in western countries where cars are often a necessity so the cars on the road reflect all income levels. The fancy BMWS are being driven by people who drive them because they can and want everyone to see that they can.
ScotsAlan:
BYDs are driven by the people who win the number plate lottery. Bmws are driven by the people who can afford them. The little 35000rmb vans are driven by the people who need to drive for their living.
dongbeiren:
I guess I just don't see why someone would buy a crappy car unless they really needed one to get around day to day. I mean, the costs of maintaining it are greater than the costs of taking taxis around unless the person works far away. Plus you have to deal with Chinese driving.... I just tend to assume that most cars in Chinese cities are being driven more for face then necessity given the public transportation options and taxis that are readily available.
ScotsAlan:
People drive cars because they want to move from A to B as quickly as possible. Of course, everyone wants to do that. Cars have fucked up the world. Work here... but live there.... no problem. Buy a car. The bankers payrolled the car makers so they could charge interest on the car loans.
Hotwater:
My crappy little Lifan 320 (a Mini Cooper style copy) was 45000 on the road new. Normal maintenance is cheap (400-500 for a service, 1600 every 1.5 years for tyres, insurance just under 3000/year). It came with a general 2 year warranty (5 years on the engine!) & though it had some small issues in the first year (just like a 1970's British Mini had!) it's been and still is a great little motor. I bought it to get to work at first (instead of 2 bus journeys to work) but now love the freedom it affords me at weekends to drive to small obscure places in Guangdong. Drove from GZ to Yangshou not long ago & it was a great ride.
I mi do agree with what others have written...the bigger cars are generally for face whereas the smaller, cheaper cars are for necessity. I prefer cheap rather than face!
The real way to transition to a consumer economy is to increase the social safety net so that people feel more secure parting with their money. Even very poor Chinese typically have a couple hundred thousand RMB in the bank for a rainy day. Without it and the support of family members who also have the rainy day fund, they would literally be left to die in the event of a health emergency. A safety net would cause the savings rate to go down and consumer spending to increase - that would mean more consumption and less investment as a share of GDP. Yes, it's true that plenty of Chinese borrow to live beyond their means and buy flashy bling but overall, the savings rate is high and the ratio of investment to consumption is skewed towards investment - hence more capital goes into erecting empty residential buildings rather than purchasing dishwashers, washing machines, ovens and other consumer goods. Of course, the large wealth inequality also is a factor here as the very rich in China have tons of cash and few investment options while the masses can't afford the afforementioned consumer goods. So addressing wealth inequality would also increase consumption as the poor spend a greater percentage of their income than the rich. Now, western countries have the opposite problem - too much consumption and not enough investment. In America, the savings rate even dipped below 0 in 2007 and now it's less than 5%. This means that a lot of Americans are a few weeks away from government dependence in the event of an emergency - while America doesn't have the most generous safety net I'd sure rather be poor in America than in China.
laowaigentleman:
That is pretty much the extent of what a government can do to implement such a transition isn't it?
If they were to do this, perhaps there would be a reaction from the real nutters who want to increase military spending and a sphere of influence.
I think like you, the path to prosperity comes from promoting social welfare and encouraging people to follow whatever path it is that makes them happy.
Wouldn't it be nice if they cracked down on bullshit traditional values too?
I'd love to hear some social policy suggestions combined with these economic ones considering that the Chinese entrepreneurial spirit is basically monkey see, monkey do.
Rule of law. Free and uncensored internet.
icnif77:
Yeah, try EU for 'free'
Internet. I just read the title of the thread. It's a bit faster in EU than in China, but not free. Every 'free Wi-fi' has 30' limit.
laowaigentleman:
What's the difference between "free" and "uncensored" given the context you've chosen to apply "free" to then?
Englteachted:
I hope to god you aren't a teacher. Unrestricted , let me give you some words from the dictionary 'unobstructed' why am I even bothering. Censorship is 1 type of restriction, other ways China restrict the internet is by limiting speeds to certain sites, monitoring and arresting people for 'rumor mongering' and I can't forget real name registration. I didn't even mention hacking and attacking websites that post articles and posts that critique.
