Economics
Every time I come back to China, I find myself thinking about economics. I've posted about this in past years, so I'll focus on what I'm thinking right now.
The economic situation in China right now is very... dynamic. Even half a dozen years ago, when everybody in the US was talking about how amazing it was how quickly China's economy was growing, there was simultaneously a growing dichotomy between the rich and poor. I remember talking to a taxi driver when I was here on vacation with GD & Becca, and him talking about how things were getting worse than that had been in the past just as everybody was saying that people were richer.
At that time, about four years ago, the wealthy were largely invisible, as they existed in very different contexts than those I frequent, or at least in Shanghai and southern cities. Today, that's no longer the case.
This afternoon, I went shopping with my aunt. She took me to a shopping center she knew very well, to discover that another one had opened right next to it, just a few days ago. So we checked out the new one first. The decor was classy, but that's to be expected with new development these days. The prices were astronomical. Nothing was listed for less than 1000 yen (the current exchange rate is about 1:7), most things (ie, mode) were 2000-some, complex things like dresses would go far higher. That is, in other words, on the price scale of upscale couture in the west.
Next door, the old mall ran on the price scale as of about four years ago-- 100 - 1000 per item.
In the clothing area of the grocery story I went to earlier in the morning, things were still 10-300 per item. And on a street market, I could probably still get prices about half those in the grocery.
The remarkable thing, to me, is that all of these economies function simultaneously. I don't know if this is because the socioeconomic situation is still in transition, or if there is something more sophisticated going on. You can literally go next door and buy the same sort of item for a fraction of the price, or go to a different shopping context and get the same thing for nearly two orders of magnitude less. Image doesn't just matter a great deal like it does it the US-- it literally carries about 90% of the economy.
What's even more remarkable about this is that there are not geographic, or even social, lines dividing these contexts. The people who are selling you clothing at 2000 yen per article? They make less than 1000 yen per month. In fact, their base salary is about 500, sans commission. How can you do this without mutiny? I can only imagine it happens when there is such a large workforce that everyone is aware of how profoundly replaceable they are? Or perhaps that's naive, and there is a lot of social context going on that I'm not aware of.
In addition, the people buying the clothing are not necessarily the extraordinarily rich-- Everywhere, I see people who haggle to no end over 10 yen of food casually blow 300 elsewhere, and I am told the effect scales-- that ordinary salarymen (not the ones make 1000 a month, but maybe the ones making 10,000) will put down the money for the expensive shopping. Where do they get it? Why do they do this? It's unclear.
Apparently, my cousin, when he was a bookstore employee, was one of the ones making 1000, and now he makes 500-1000 per day in his game store.
By contrast:
This morning, returning from the grocery mart with my grandmother, we were passed by a man walking a bicycle that had a mysterious small cloth-covered object on the back. He was hollering something I utterly didn't understand. I asked about it, my grandmother stopped him, and it turned out he was selling this particular type of sticky-rice-and-date cake.
He had a single sticky cake, about the size of a pizza and about two inches high, on a plate on the back of his bike and covered it with a cheesecloth. If he hadn't been hollering, it would have been impossible to tell that he was actually selling a product instead of just carrying some minor object on his bike. He had no other products. He had only one giant cake. He was selling it by the half-kilogram-- 4 yen per half-kilo. He'd slice it for you and put it in a little plastic bag to take away. (We got a little to try-- it turned out to be delicious and I will seek him out tomorrow.)
I couldn't help but ask my grandmother about this. "How much do you think he makes doing that?" I asked. She said, "Well, he sells for 4 yen per half-kilo, that cake is maybe 20 half-kilos, so that brings in about 80 yen per cake." I was thinking, okay, maybe that's not that bad, especially if he can get four or five cakes sold in a day. Bizarrely specific, but not that bad. I asked, and she didn't know how many he's likely to sell in a day. Then she casually said, "Rice is 2 yen per half-kilo. But dates, dates are expensive." So, wait. What is his profit margin? How long, exactly, does it take him to sell the whole cake given that it's the only one he's biking around with. She said most of his clients are kids, who like it because it's sweet. So he doesn't even have street corner stores buying it wholesale from him.
I really wonder what life would be like if all you ever do is sell slices of sticky rice cake. Or if you regularly handle objects that retail for twice your monthly salary. It's just a completely different way of experiencing economics.
The economic situation in China right now is very... dynamic. Even half a dozen years ago, when everybody in the US was talking about how amazing it was how quickly China's economy was growing, there was simultaneously a growing dichotomy between the rich and poor. I remember talking to a taxi driver when I was here on vacation with GD & Becca, and him talking about how things were getting worse than that had been in the past just as everybody was saying that people were richer.
At that time, about four years ago, the wealthy were largely invisible, as they existed in very different contexts than those I frequent, or at least in Shanghai and southern cities. Today, that's no longer the case.
This afternoon, I went shopping with my aunt. She took me to a shopping center she knew very well, to discover that another one had opened right next to it, just a few days ago. So we checked out the new one first. The decor was classy, but that's to be expected with new development these days. The prices were astronomical. Nothing was listed for less than 1000 yen (the current exchange rate is about 1:7), most things (ie, mode) were 2000-some, complex things like dresses would go far higher. That is, in other words, on the price scale of upscale couture in the west.
Next door, the old mall ran on the price scale as of about four years ago-- 100 - 1000 per item.
In the clothing area of the grocery story I went to earlier in the morning, things were still 10-300 per item. And on a street market, I could probably still get prices about half those in the grocery.
The remarkable thing, to me, is that all of these economies function simultaneously. I don't know if this is because the socioeconomic situation is still in transition, or if there is something more sophisticated going on. You can literally go next door and buy the same sort of item for a fraction of the price, or go to a different shopping context and get the same thing for nearly two orders of magnitude less. Image doesn't just matter a great deal like it does it the US-- it literally carries about 90% of the economy.
What's even more remarkable about this is that there are not geographic, or even social, lines dividing these contexts. The people who are selling you clothing at 2000 yen per article? They make less than 1000 yen per month. In fact, their base salary is about 500, sans commission. How can you do this without mutiny? I can only imagine it happens when there is such a large workforce that everyone is aware of how profoundly replaceable they are? Or perhaps that's naive, and there is a lot of social context going on that I'm not aware of.
In addition, the people buying the clothing are not necessarily the extraordinarily rich-- Everywhere, I see people who haggle to no end over 10 yen of food casually blow 300 elsewhere, and I am told the effect scales-- that ordinary salarymen (not the ones make 1000 a month, but maybe the ones making 10,000) will put down the money for the expensive shopping. Where do they get it? Why do they do this? It's unclear.
Apparently, my cousin, when he was a bookstore employee, was one of the ones making 1000, and now he makes 500-1000 per day in his game store.
By contrast:
This morning, returning from the grocery mart with my grandmother, we were passed by a man walking a bicycle that had a mysterious small cloth-covered object on the back. He was hollering something I utterly didn't understand. I asked about it, my grandmother stopped him, and it turned out he was selling this particular type of sticky-rice-and-date cake.
He had a single sticky cake, about the size of a pizza and about two inches high, on a plate on the back of his bike and covered it with a cheesecloth. If he hadn't been hollering, it would have been impossible to tell that he was actually selling a product instead of just carrying some minor object on his bike. He had no other products. He had only one giant cake. He was selling it by the half-kilogram-- 4 yen per half-kilo. He'd slice it for you and put it in a little plastic bag to take away. (We got a little to try-- it turned out to be delicious and I will seek him out tomorrow.)
I couldn't help but ask my grandmother about this. "How much do you think he makes doing that?" I asked. She said, "Well, he sells for 4 yen per half-kilo, that cake is maybe 20 half-kilos, so that brings in about 80 yen per cake." I was thinking, okay, maybe that's not that bad, especially if he can get four or five cakes sold in a day. Bizarrely specific, but not that bad. I asked, and she didn't know how many he's likely to sell in a day. Then she casually said, "Rice is 2 yen per half-kilo. But dates, dates are expensive." So, wait. What is his profit margin? How long, exactly, does it take him to sell the whole cake given that it's the only one he's biking around with. She said most of his clients are kids, who like it because it's sweet. So he doesn't even have street corner stores buying it wholesale from him.
I really wonder what life would be like if all you ever do is sell slices of sticky rice cake. Or if you regularly handle objects that retail for twice your monthly salary. It's just a completely different way of experiencing economics.