Friday, January 23, 2009
I, like everyone, celebrated the inauguration of Barack Obama as the 44th president of the United States. In the past two days, I read about how Tim Geithner, representing the president's views, has stated that China is a "currency manipulator". My ideas of change, like the Circuit City analogy, is broken into 1,000 pieces.
The idea that China is a currency manipulator is NOT (apologies for emphasis) a new idea. The afterglow of the inauguration has lead to a anti-China bedfellow. Actually, despite China's surface hardness and designation as "center" of the world, it has many problems. The problems are far deeper, and more serious, than anything the U.S. faces. If there were a "hard choice" to make, it would not be to hold China to task for currency manipulation; it would be to take the union workers, especially in the auto industry, to task. The auto industry manipulates the economy far more than China does its currency -- and the people who would suffer or benefit (in absolute terms) are in China, not Detroit.
Anyhow, the world is changing. There is a crisis. There is change. But will change lead to efficiency, or to surface change and more of the same. Mr. Geithner seems to be the same old story -- and actually, a silly, pandering capitulation.
One hopes that change does come -- that Circuit City becomes more like Hilon (Zhongguancun's most famous electronics market), and that Obama rejects "common sense" of leftist economics. The former would lead to more efficient and effective markets in electronics; the latter would lead to more just and equitable markets in the world economy.
With only two days in the hole, this is definitely food for thought.
Tuesday, January 20, 2009
Wednesday, January 07, 2009
As a sub-city of the Jinhua municipality, Yiwu is famous for the massive markets in small products for sale. Recently, I visited the International Trade City (guoji maoyi cheng) and walked through stages 1, 2, 3. The market consists of masses of stores and products, all operated by individual-family households (getihu)—a China-specific designation that refers to a private enterprise of less than 8 people. While the majority of customers are from mainland China, there is also a large number of Asian bargain hunters, including those from Malaysia, India, Pakistan, and Russia. The proliferation of overseas purchasers and quality inspectors reveals, as well as dozens of hotels (and not much else) scatted around the Trade City give testament to the product-market role of this area of the city.
To understand something about the market, and try to make comparisons with the massive “electronics cities” located in Zhongguancun but also in cities throughout China, I decided to search out a pen with a laser pointer. In Shanghai, I had found a simple laser pointer in Bainaohui Electronics City at a friend’s store for the unfriendly price of 100 RMB ($14.60, using 8.63 as an exchange rate). In the first pen store I found in the market, I inquired about the price of a laser-pointer pen. “3.80 yuan, lowest price” said the shopkeeper, taken aback at my Chinese but responding quickly and firmly. Eager for the great deal, I began to pull out a 5-yuan note. “Wholesale,” interrupted the shopkeeper, “that is the whole sale price.” “Oh, how much for just one,” I asked. “Don’t sell [that way],” ended our interaction. At another pen store, I found the same laser-pointed pen and a similar price, 4.30 yuan. I asked if they sell retail or individually. “No, that is just a sample (yangpin).”
My failure to buy the product revealed one of the prevalent, though not rigid, characteristics of product markets at the Trade City: it is a wholesale operation, where the stores are a front for a network of factories and shipping that stretches from the Yangtze River Delta (Changsanjiao) to the Pearl River Delta (Zhusanjiao). The stores that quoted me a 4 yuan price for a pen with a laser pointed wanted a minimum order of 1,000 units to give me the wholesale price, otherwise they wouldn’t sell (I did convince another shopkeeper to sell me the pen for 5 yuan). Another product I investigated was a pen that can record 2 GB of video (of reasonable quality, given the camera is embedded in a pen) and audio somewhat surreptitiously. This product was quoted at 180 yuan, and the woman was willing to accept a minimum order of “several dozen”—a proposition I considered briefly, though the prospect of selling several dozen less on pen video camera seemed a little daunting.
Unfortunately, I did not stay long enough to investigate the relationships between different stores: whether there are wholesalers’ wholesalers, or bigger companies that stand behind the store fronts and supply them with goods, as is the case with computer, printer, MP3, etc. sellers in China’s urban electronics markets; do stores collaborate with each other and refer business to one another; the proportion of customers who are long-term versus short-term—or the proportion of customers that comes through a network of relationships (family, friends, native-place fellows, classmates) versus those that just walk into the market.
There is a sense of social in the Yiwu product market, however. Given my limited time, I could easily see the families that came to the market, not just to view and purchase goods (mothers, fathers, and children browsing the thousands of toys being bounced, flown, crashed, and driven in the halls), but to live lives (most if not all stores have computers connected to the internet, and many communicate back and forth using QQ, a chat program from Tecent similar to MSN and Aim—and visiting between stores, and similar age young people chatting and playing while they tend to business, hence growing up both business-wise and social-wise). This phenomenon is identical to Zhongguancun’s electronic markets, where life is lived and relationships are used, built, broken, and developed through the market, with the focus on customers and buying and selling forming only one part of daily life.
Yiwu is not a very accessible city for someone who does not speak Mandarin Chinese. However, it is only a 2-hour train ride from Shanghai (then a 30 yuan cab trip to the Trade City). There are three 5-star hotels listed on Ctrip (a China online travel agency which books hotels at competitive rates and is free) in Yiwu. Yet, in the City of Jinhua, another place I visited on this trip, which technically oversees Yiwu, there are no 5-star hotels and sparse 4-stars (I stayed at the Jinhua International Hotel, a 3-star; in Yiwu, I stayed at Snow Peak Hotel, also a 3-star, which sits literally on the 3rd phase of the Trade City). There are, however, many, many foreigners, so it should be possible to get by with English.
Who knows? If you can pony up 10,000 yuan or so you can take a box of goods back to Shanghai (or elsewhere) and start selling or “doing business” (zuo shengyi), rather than just working. As the Chinese expression goes, “it is better to be the head of a chicken than the tail of a phoenix” (ning zuo jitou, bu zuo fengwei). 宁做鸡头，不做凤尾
I was riding the subway to the real estate development I am currently researching the other day, and as I stood up to get off, I noticed the profile of Che Guevara, the South American revolutionary that emblazens many T-shirts and posters in colleges throughout the United States. Curious as to Che’s appearance in Shanghai, no less on the number 5 subway line (which runs between Xinzhuang and the Minhang Economic Development Zone—both in Minhang District and all outside the outer-ring road—I leaned in for a closer look, and discovered an image of a Che T-shirt on a bamboo rod hanging over a narrow alley.
While the image is slightly blurred, you can make out the Chinese if you squint:
Literal translation: “Chaotically hanging and drying your clothes -- it [Che shirt] is afraid of losing face, how about you?”
Figurative translation: “By hanging clothes out to dry next to the street, on sidewalks, from electric lines, etc, you go against principles of suzhi [quality, properness, manners], so you should be ashamed.”
Explanation and Opinion: It is definitely true that Shanghai people, more often outsider in Shanghi and especially the floating population (liudong renkou), lack proper places to hang their clothes. For those in apartment complexes, the “sun room” is a feature of almost all apartments, an area in which and from which to hang clothes. As I have mentioned in a previous blog, any view of an apartment complex in China will reveal hundreds to thousands of pieces of clothing in a rainbow of colors. In China, this appearance is jokingly referred to as “the 10,000-color flag of China” (wanguo qi) Hence those with apartments, more likely to be Shanghaiese or the huji population who make 70% of the population in 2007 according to the latest number from the Shanghai Bureau of Statistics (http://www.stats-sh.gov.cn/), have no need to be chaotic or outrageous with where they hang their clothes.
For those with less fortunate circumstances, however, the street is often the only place outside their domain (whether store, abandoned building, alleyway, etc.) where wet clothes can catch a brisk breeze. Che, figured in the city government public service announcement, is reminding this latter group (and perhaps re-enforcing what is “civilized” about the former group) that they should hang clothes away from the street, sidewalk, phone pole, fence.
My two cents: In thinking about Che and hanging clothes out to dry, the first thing I am reminded of is, as I argued in Green China, that China consumers are incredibly environmentally conscious. They do it out of cost, rather than some ideological commitment to the earth. Using the sun and wind to dry your clothes saves energy—indeed, a salute to the 10,000-color flag. The second thing is that, as a 2-year resident of Shanghai, the site of clothes hanging from phone lines, underwear in front of stores, pants and shirts on fences, indeed gives the appearance of untidiness and chaos—two things a stereotypical Shanghaiese dreads, preferring instead well-groomed, precise, and orderly appearances (of people as well as of buildings, streets, and apartment complexes). Perhaps I have become a little Shanghaiese myself. But the third point comes more from my Beijing-background, where the people reign supreme. There is nothing unsanitary (scientifically) or harmful about these clothes hanging in the street. Indeed, living in cramped and often dirty conditions, people still wash and dry their clothes—necessitating a place to hang them. The necessity of saving energy in the process of cleaning trumps Shanghaiese uneasiness about appearances. It is unfortunate that Che doesn’t agree.