Darden Beijing Trip: Day 6 – Chinese Economics and Shopping in Crazy town

Dimensions of Marketing in China
The adventure here in China continues at a break-neck pace, although you can feel a sense of winding down.  Today we had a piece on marketing in China delivered by Jeongwen Chaing, a professor here at out host school, The Cheung Kong Graduate School of Business.  I continue to be astounded by the facts regarding China.  You get a sense of a frontier town where there’s plenty of money to be made and people are madly dashing around to make sure they see their cut of the action.  “Frontier town”, however, is a complete misnomer because there is absolutely nothing frontier or rustic about Beijing.  Everybody has a cell phone and the city has about every amenity you could think of.  Professor Chaing talked a bit about the Chinese population and the numbers are just staggering.  China has about 1.3 Billion – with a ‘B’ people.  Compare that to 300 million for the US.  The government has mandated a “one child” policy that strangely enough is clearly evident on the street – you just don’t see that many kids.  Although this policy has been effective at reducing the rate of growth, no action comes without negative consequences and China’s one baby policy is no exception to this rule.  The quantitative effect is that of a gradually aging population.  As the population gets older fewer births means that the average age increases.  In any economy, the greatest output is attributed to the younger worker and the net effect is a potential reduction is viable output decades down the road.  The other sociological problem with a one child according to Chaing is that the sole child, often a male, tends to be “spoiled rotten”.  Of course this is more subjective, but entirely conceivable.
Chaing also talked about the socio-economic distribution of wealth in China.  Again the disparities are astounding.  In general, China tends to be divided into the have and the have-nots.  This is a theme that has been repeated often this week.  Rural farmers make up huge composition of the overall population in China, especially in the outlying regions of the country.  There are about 700 million farmers here.  Typically the farmers have access to (only the government can own land here in China) a small chunk of land that sustains them, with the potential to produce a small marketable surplus.  The surplus is meager, averaging about 500 RMB per year.  In US dollars, that’s about $70 USD.  That’s not much by any standard.  The government realizes that this imbalance is serious and isn’t sustainable.  The government continues to work on reforms to make farming less provincial and more efficient.
The Great Race
Tomorrow we have to close the session with a brief presentation to the cohort on a particular sector of the Chinese economy.  Katherine, myself, Asif, Paul, Igor, Dale and Michal landed in the technology sector.  We decided to hop in a cab headed down to the “Silicon Alley”, an area of Beijing that has a bustling electronics market in addition to being the Chinese home to many of the global technology companies.  The cab ride was not unlike the trip up to the great wall with the exception of me being witness front and center.  I drew the short straw and was shotgun up front.  It felt like I was in some surrealistic video game as our cabbie deftly weaved in and out of people, bikes, busses and what seemed like every car, moped and scooter on the planet.  When you’re not dodging pedestrians at 60 miles/hour, you’re at a dead stop in traffic.  This creates a alternate cycle of terror and boredom.  We arrived at the electronics flea market and like most shopping experiences in China, it’s just overwhelming.  You get a sense of what it feels like to be a rock star as people rush up to you pimping digital cameras, cell phones, memory cards and just about any electronic device on the planet.  The psychology is interesting because you almost obligated to get something because it must be a great deal, right?  The biggest piece of advice is that you probably should know what you want and already know what you can get it for in the US.  For example, I was tempted to buy a video iPod while I was there but I really hadn’t priced them before I to China.  With a quick call to his wife, Dale’s better half confirmed the “haggle” price wasn’t that much off the Target Store retail price.  In the end, I figured a 10% premium on a $150 transaction was worth it if I had problems with the thing.  In the US you just bring the thing back to Target.  If you purchase the gadget in China and you have a problem, what do you do?
Things Draw to a Close
Brad and I returned to the Chinese restaurant where we ate the first night.   We were too tired to be adventurous but not tired enough to give into the temptation to go to Outback Steakhouse.  Yeah, there’s one here in Beijing along with KFC, McDonalds and other American icons.  We had another great meal and reflected on the week.  I think we both had a blast but agreed it’s getting time to head home.  We had our last beer in China, paid the tab and I headed up to the room to start on the editing for our presentation tomorrow.  After we deliver our presentation, I’ll post it here for mass dissemination.
Peter

Technorati Tags: Beijing, China, Darden

Tagged as: Beijing, China, Darden