

In China's Orbit - garply
http://online.wsj.com/article/SB10001424052748704104104575622531909154228.html?mod=WSJASIA_hpp_LEFTTopStories

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garply
This article really struck a note with me. The atmosphere here in Beijing
really has changed a lot over the past few years. The relative wealth of the 2
countries is directly evident in the different attitudes of Western expats and
native Chinese towards money. The expats here are becoming noticeably poorer.
I see it because I am a retailer of luxury goods.

There was a time when being on an expat package in Beijing meant living the
good life - you could splurge however you wanted because the cost of living
was so cheap. Today, my products are really pushing the affordability of the
expats here but are considered a great value by the new middle class here.
Several times a week I get complaints from expats that our prices are too
high. I've never heard that from a Chinese. Indeed, the opposite is true,
several times a week Chinese people tell me what a good deal I'm offering.

It's actually getting a bit problematic for me. Inflation's pushing my costs
up and my competitors are raising their prices as well. I've been raising
prices alongside everyone else, but I'm really about to price myself out of
the expat market. Expats who receive their paychecks in dollars are seeing
their purchasing power diminish and I think it's having a big psychological
effect on them. They're really important to me, but I would be crazy to not be
trying to reduce the percentage of sales that they constitute.

This is directly impacting my spending decisions. A few years ago, it would
have made sense for me to drop money to advertise in expat magazines. These
days, that extra money's all going to marketing towards the Chinese.

~~~
elblanco
In all this, I'm never clear about where the average Chinese citizen is making
all this money...is it all from investments?

~~~
garply
There are wealthy entrepreneurs, there are children of wealthy entrepreneurs,
there are wealthy landlords.

A lot of my customers, who are white-collar, have made good money in the stock
market over the past decade and also in the real estate market.

But to be honest a lot of it is a matter of confidence. My Chinese customers
definitely don't make as much as their American counterparts on average, but
there is a sense that life is getting better and better, they're making more
and more money, they have savings in the bank, so it's OK to splurge from time
to time. I would say 40-50% of my Chinese social circle owns an iPad, even
though they probably only pull in 20-30k USD a year.

~~~
jamespitts
This strikes me, especially the last line. It seems as if your Chinese
customers are spending like Americans do during bubble times.

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kablamo
My frustration is many in the West don't recognize the genius and moral
standing of the Chinese core leadership. Westerners focus on the censorship,
the lack of democracy, the human rights violations, the communism, or the
capitalism. The image continues to be one of a crazy communist dictatorship
with no direction and no morals that just happened to get lucky with some
twisted capitalism.

But capitalism is only a part of their success. Everyone knows you should do
some free trade and open up the economy. The really hard part of running a
country is managing the powerful internal special interest groups and getting
all the systemic incentives aligned correctly so that people work together to
produce better government and a better economy. Russia and many others have
tried capitalism and failed because their political systems sucked.

The triumph of the Chinese leadership is how they have adapted the Singapore
model, managed their powerful internal special interest groups and an insanely
diverse geography and ethnic populations that don't speak the same language,
keeping the country together, while getting a growing number of people to work
on improving government and the economy and moving towards creating a fair,
unified, and stable environment for business and wealth and improving peoples
lives.

edit: I suppose I really know nothing about the moral standing of the Chinese
core leadership. I don't know what they are thinking. But I see how many they
have lifted out of poverty and their dedication to improving government and
the lives of those people.

------
joshes
> _This optimal system of social and political order emerged in the English-
> speaking world, based on property rights and the representation of property
> owners in elected legislatures._

I'm not sure this is a fair statement. To me, referring to a system as optimal
implies a sense of finality, as though we have a rigorous, tested proof that
this socioeconomic system we've developed in the West is optimal and complete.
Again, to me, this is an absurd notion.

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PakG1
Crazy, I just wrote about this recently. With all the economic debate that's
going on right now, I guess it's the topic du jour. The guy's summary is
amazing, wish I could write as well as him.

[http://www.pakg1.net/2010/10/changing-chinese-mindset-
toward...](http://www.pakg1.net/2010/10/changing-chinese-mindset-towards.html)

~~~
cstross
Ahem: that's professor _Niall Ferguson_ you're talking about!

<http://en.wikipedia.org/wiki/Niall_Ferguson>

(One may argue with aspects of his outlook and analysis, and even his
scholarship -- as have the likes of Paul Krugman -- but even so, he's one of
the most famous historians of the current period, and an excellent prose
stylist besides.)

------
ximeng
Anyone know what the as yet untranslated paper is? I found this:

<http://www.ccer.edu.cn/download/8359-1.pdf>

But it's from 2007, wondered if there's anything more recent.

------
gxs
There's one thing I can't wrap my head around. I post here hoping that one of
the bright minds will offer some explanation. What will happen when the rest
of the world gets fed up with the one way relationship China has set up with
the them?

It's all fine and dandy now - china makes cheap goods and exports them to the
rest of the world. In addition, they are slowly taking on more sophisticated
tasks as evidenced by their latest super computer, I'm sure soon we will see
contributions in technology to the world economy.

But what will happen when the rest of the world gives them the proverbial
finger? When they finally say - screw you, either open your market to us,
compete with the rest of the world's rules - or fuck off we won't buy your
goods.

Is this possible? Would the world even be able to afford such a stance? Or
will this happen and what will china do? How much would the projected GDP of
the US be if it included china's 1bn population and the potential market it
within it?

~~~
snowwindwaves
how's your chinese?

~~~
gxs
why do you ask?

~~~
snowwindwaves
Imagine the chinese market is made open to you. What has changed from today's
reality?

What makes access to the chinese market difficult for westerners, apart from
the luxury/status items? The language and cultural barriers are still
significant.

