Wednesday, November 7, 2012

Capitalism with Chinese Characteristics

I had heard the phrase, “Capitalism with Chinese characteristics,” a few times before coming to China, but I never understood exactly what that meant. As an American, I was very familiar with capitalism, but I couldn’t imagine what these “Chinese characteristics” were. Now, after a year here, I am realizing more and more what the tail-end of that phrase really means.

Characteristic 1: In the land of Costco, Sams Club, and Blue Light Specials, it is second nature to understand that buying in bulk reduces costs.  I mistakenly took this rule of thumb as a rule of economic law, and as an attempt to save money on my volunteer salary, I would buy 6-liter packs of milk, large bottles of water, and many more Oreos than any man ever should.  One day, to remind myself of how savvy a shopper I was, I decided to do the math and calculate how much money I was saving.  Unbelievably, the 6 liter boxes of milk were the exact same price as twenty-four 250ml boxes. The water was 1.6 times more expensive than buying multiple small bottles, and while the Oreos were a money saver, then Spring Festival Edition Oreos, identical in every way to other Oreos, were a third of the price.  I can’t wait for Spring Festival again next year.

Characteristic 2: If you come to China, don’t be confused by the signs that say, “SALE.”  Firstly, the percentage is actually percent ON and not percent OFF.  This has thrown me off a number of times, especially because the number will often be between 20-30%.  Strangely enough, these sometimes 30, 20, or sometimes even 15% “on” sales, will not signal a closeout sale, or a special occasion of any kind.  It’s just normal business to mark down your products over ¾ of their market value (or significantly mark up the market value).  Either way, don’t jump on sales, because they also have no real time limit like in America.  Sales are perennial and continual… thus making them not sales at all… but I guess that’s why it’s Chinese Characteristic #2.

Characteristic 3: When you buy something in China, especially online, there is little to no security that what you are buying is a genuine product.  If the item you want to purchase is more technically complex than a banana, it is actually quite likely that what you are buying is a rip-off of some kind.  To further illustrate this, I will describe the multi-leveled quality control that exists within the Chinese black market.

First you have 假的 or just plain old fake.  This is the classic New York Rolex that you buy on Monday and throw out on Thursday when you realize it has 55 second minutes and that Rolex is spelled “Roleks.”

Next you have 山寨 or “mountain village.” This is a better-looking imposter.  You pay a little extra for the guarantee that iPhone is spelled correctly, but reliability is nowhere to be found in this level.

Then there’s 仿的. You can be confident that this fake will not only fool your friends, but sometimes it will even fool you too.  Resembling the product very closely, but still not actually being a Louis Vuitton.

Lastly, it might not be considered fake, but it is a category that is very particular to China, and that would be simply, bad quality or 质量不好.  This isn’t a bad quality brand, for it might actually come from the same factory as the Nike Air Force One’s that you can buy in America for $150.  The difference is that when the American shoes pass quality control and ride first class to a Payless near you, these shoes fail to process the needed paperwork for an exit visa and are just shoveled into the online market under that heading "caveat emptor."

Characteristic 4: The prime example for the fourth characteristic is the Peanut Butter in Kaili.  Only available at one store, the Peanut Butter in Kaili is a rare commodity.  For that reason, its price is relatively high – about $3 a jar.  Nevertheless, the price will jump 2 or 3 times, seemingly at random, because I’m not aware of the seasonal growth patterns of peanut butter. Stranger yet, I just bought three bottles of peanut butter on one fateful day, when 600g tubs of peanut butter were actually cheaper than 400g tubs of the exact same brand (19.80 and 19.90 RMB respectively). It seems more and more like pricing is just an art, and has nothing at all to do with overheads, production costs, or supply/demand.

In closing, the “Chinese Characteristics” you might hear about include such things as anti-bulk discounts, year-round 15% percent-on sales, the fake-goods market, and totally random/counterintuitive pricing.

1 comment:

  1. You are a prime observer of the human condition. You should get your Ph.D. in Sociology. Hope you are having fun, Trigg. Love, Aunt Maureen