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.
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.
It's all about "face." Modern urban Chinese care more about name-brands than their American counterparts - you've got French-branded grocery chains, Australian jean stores and German cars in all major urban cores. People judge you based on solely three things, prestige of the University you went to, prestige of the Company/Dan-wei you work for, the prosperity of the region you came from (coastal or inner region). All of these three things point to one thing: how much you money you've got.
In a country that's more capitalistic than America and yet still have inferiority complex still fresh from 50 years ago, you've got to flaunt your wealth even if you don't gotta it.
Prior to the 2008 financial crisis, the Chinese index was up to 10x from 2000. "Stir-fry stocks" is a national obsession as much as Sunday football states-side; and even now, the real estate market speculation is climbing northward to basically match NYC condo price for a Shanghai condo.
So like the 1920's America, no the average Chinese citizen is not making all of this money but a select few have's are making money hand over the fist off the have-not's. Modern China is a rich man's heaven and a poor man's hell.
> you've got to flaunt your wealth even if you don't gotta it.
I've noticed this trend with folks who came from an emerging economy. In my case, growing up in an immigrant rich area, it was hard not to notice all of the Korean kids with the designer clothes, and parents picking them up in new BMW, Benz and Lexus cars -- most of whom worked their tails off to get into the choicest colleges. Inquiring about their first generation immigrant parents almost always revealed they worked their asses off in low-end jobs like grocery stores, cleaning services or dry cleaners and often as not lived in crummy apartments in a sketchy part of town. The need to project a "wealthy" image was so great that they often were in deep debt to buy all that stuff. It seemed crazy to me till years later I started to understand better the social pressures that caused this phenomenon.
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.