The End of Cheap China: Economic and Cultural Trends That Will Disrupt the World (9 page)

Melanie’s remarks of how her mother and father behaved resonated with my own experiences. When nightclubs first started opening up in China, club-goers were usually not young people, but middle-aged men and women dressed up in revealing clothes as if they were 20-year-olds, dancing on the floor with an unnatural ferocity. It always seemed to me they were trying to capture a past they had never gotten a chance to experience.

My talk with Melanie showed how clearly the Cultural Revolution still impacts Chinese society across generations. Melanie’s mother felt she missed out on her career and a happy home life, so she pushed her daughter to strive for the best and to realize her dreams. She also spoiled her, waiting at home for her every night until she got home from work to make dinner for her. Despite Melanie being in her twenties, her mother still washed all of her clothes.

Outside of work, Melanie had few financial responsibilities or costs. Her parents covered her food and housing expenses. She was so confident of her future career earnings that she did not save any of her $1,000 monthly salary at her entry-level business development job with a consulting company; she spent it all on shopping and eating at restaurants with friends. She had just signed up for a credit card, so instead of having to save up for two months before buying the latest iPhone, she could buy it on credit. She told me she changed her mobile phones every nine months, selling old ones through online e-commerce sites like Taobao.

There are millions of young, upwardly mobile women in China just like Melanie. They are showered with love and are taught to believe they can achieve anything. Their parents are doing whatever they can to help them achieve the goals they had for themselves, but were not able to achieve due to the disruption of the Cultural Revolution. And they are optimistic that their personal and professional lives will continue to get better and better and better.

Most horror stories about China’s gender inequality now occur in rural areas. Some villages have 150 boys for every 100 girls, and in these backward places women are still destined to live lives of servitude. Thankfully, as with rising gender equality in urban areas, the inferior status of rural women is starting to change, as salaries for the positions migrant women typically take in the service sector outpace those of men, and as better educational opportunities are introduced.

Julie came from a totally different world than Melanie. I met her one day in Shanghai at a massage parlor. My feet were aching after a long run, and I needed a foot massage to ease the kinks out. Julie was the masseuse assigned to me. As I dipped my feet into a bucket of warm water laced with traditional Chinese medicinal herbs—the first part of a foot massage—Julie started to tell me her life story.

Julie was born in the late 1980s on a rice farm in Jiangxi in south central China, one of the most underdeveloped provinces in the country. Life there was a struggle for everyone when Julie was a child. Access to food often depended on conquering nature. Frequent floods and droughts scourged the area.

Where Julie grew up, 40-year-olds looked like 90-year-olds, as the hard farm work turned skin into leather. Feet were calloused from walking the mountainous terrain without adequate footwear, and fingernails were yellow and thick. Luckily for Julie, she was not destined for a life on the farm. She married young, and she and her husband left the countryside alongside tens of millions of other migrants looking for work in urban areas. Through hometown connections, they ultimately both found work in Zhejiang, an industrialized province, at a fashion-accessory factory. There she glued buttons onto accessories destined for America and Europe. Julie soon found a job at a foot massage parlor, and dropped her tiresome job in the factory for the higher-paying position as a masseuse.

Julie later moved to Shanghai, where she now gives massages to between five and seven wealthy Chinese clients a day. Foreigners sometimes come, she said, but Chinese are the bigger spenders. The pay and working conditions in massage parlors are better in Shanghai than in Zhejiang. The work is hard and tiring, and she has huge, yellowed calluses on her knuckles from pressing against her clients’ feet, but she makes nearly $700 a month—a fortune in her hometown, where it often takes half a year to make that much.

Unfortunately, Julie’s husband couldn’t find work in Shanghai, so he returned to Zhejiang, where he makes $200 a month as a worker in the fashion-accessory factory. Julie said it was tough being away from her husband, whom she married for love, but her family needed to make money.

Julie said she recently bought a $90,000 apartment back in her hometown of Jiangxi, using mostly her own earnings as a deposit. She had saved most of her earnings for eight years to put a 20 percent down payment on her home. For the vast majority of Chinese, owning a home—something that was not allowed in the first four decades of Communist rule—has a profound significance. People do whatever they can to buy a home, and they view it as the ultimate goal in life. They often pool money from parents and grandparents and live together under one roof. The average age of a home buyer in China is 27, five years younger than the average home buyer in America.

Julie’s two-year-old daughter still lives back in her hometown and is being raised by her husband’s parents, so she saves as much of her earnings as possible to send back to them. It is hard being away from her child, she said, but as she started to push acupressure points on my feet, she justified it to me. “I can make more money than my husband,” she said. “We have no culture, no education, so I have to do the work because he cannot make much. My plan is to work here for several more years as long as I am young and physically fit, and then I will go home to be with my family. Maybe I will use my savings to open a small clothing shop.”

As Julie told me her story, I could hear alternating pride and frustration in her voice. Pride from becoming the main breadwinner in her family and from the respect this position commanded from her in-laws. The frustration was prominent when she spoke about living away from her daughter, and even more so when she explained to me that her husband would shortly be moving back to Jiangxi to be with her.

Practically speaking, Julie said her husband could probably earn almost as much in Jiangxi cobbling together odd jobs as in a factory in Zhejiang, and having at least one parent raise their child is better than none, so they decided he should move back home. Generations of Chinese children have been raised by grandparents over the last two decades, so parents in their twenties can find better jobs in cities, to work in factories like Laura Furniture’s in Guangdong. Sadly, these parents can often only afford to return home during the Chinese New Year holiday.

Job prospects are improving in rural hometowns, so one parent often moves back home to be with the child, like Julie’s husband. Construction in particular is slowing in first-tier cities like Shanghai and Beijing, and starting to accelerate in rural areas, so men are finding more construction jobs back in their hometowns. With wages often higher in service sectors that attract women, men are increasingly the ones returning home while the women stay in cities to earn more money.

Four of the maids who have taken care of my home’s affairs tell similar stories. All of them make far more money than their husbands do. One of them, Little Qian, told me that her husband was a scrap metal dealer in Shanghai. He combed garbage areas and picked up discarded metal from wealthier housing compounds for recycling. In a good month he made a third of what she did—and we provided her housing on top of her pay. Her husband finally decided to move home to Sichuan Province to raise their eight-year-old son, because salaries for the work he could get in his hometown were almost as high as in Shanghai.

Little Qian is barely five feet tall and slight in build. She tires easily. I often wonder what kind of life she would have had if she had been born a few decades earlier, when the economy was largely agrarian. Her value to the household probably would have been low, because she is too small and weak to contribute much in the fields. Although she is a good-hearted person, she has a hooked nose and gray-black buck teeth. She probably would not have been valued by her in-laws for her beauty, and would not have earned her family a big dowry.

In today’s China, however, Little Qian has become the main earner for her family, an impossible role for her only decades before. When she returns home for vacations, she always packs up bundles of goodies for everyone in her extended family. When she comes back from her trips home, she excitedly tells us about how happy each relative was to receive this box of cigarettes or toy car or that bottle of cosmetics.

Countless rural women like Julie and Little Qian have become the main wage earners in their families in just the last few years. The job sphere for even rural women is expanding at a very fast pace. Men are increasingly returning home to do what has typically been a female task: raising children. While uneducated men are often limited to low-paying jobs factory or construction jobs, women have expanded their reach and are able to work in restaurants, massage parlors, and other service-oriented jobs like secretarial work in white-collar companies, where pay is higher due to the tight service-labor market.

Women from all regions and all socio-demographic groups are seeing palpable changes in the quality of their lives, and are no longer desperate enough to work as prostitutes or in other degrading jobs. Why should they, when they can make just as much money as a waitress, even if the work is tough?

New job opportunities, better access to education, and more equal positions in family life are creating a modern Chinese woman. No longer trapped in the countryside, where it is difficult to earn subsistence wages, they are working in well-paying jobs that allow them to save and empower them with unprecedented choices when they consume, be it a new house or the latest trends.

Whether it is the waitress-turned-entrepreneur Amy, white-collar businesswoman Melanie, the masseuse Julie, or the maid Little Qian, the modern Chinese woman is using her newfound wealth and position to influence consumption habits and change how brands need to approach the Chinese market. For brands like Laura Furniture, which need to convert factories from focusing on production for export to America to selling into China, or simply for brands looking to offset dwindling growth in America and Europe, understanding how the modern Chinese woman shops is critical. They not only have money, but they influence major household purchases, like automobiles and real estate, that were traditionally the male domain.

Young female shoppers in China are not as price sensitive as many analysts believe. Women tend to be value driven rather than price sensitive, and look for products that confer status. This means women will shop for luxury brands like Louis Vuitton and Gucci despite the hefty price tag, because they feel these well-known brands project an image of high status that makes them feel successful, which is what gives them value. On the other hand, women gravitate toward more affordable brands like Spanish apparel retailer Zara or H&M, because the clothes are comfortable and of good quality, but not too expensive. They also view these brands as a good value.

The importance of product safety and good value to Chinese women is defining the consumption habits of the entire middle class. In many ways, women’s rise in Chinese society and their shopping habits have redefined the Western idea of the emerging Chinese middle class. There is a middle class from a socioeconomic standpoint, but far too many analysts attribute to it the same aspirations and shopping characteristics as the American middle class.

Unlike in America, where people are often born into middle-class families and are content with their children staying in this demographic, Chinese women in the middle-income group are optimistic that they can climb even further up the social scale, either because their salaries are rising so quickly or because they expect to become entrepreneurs themselves, like Amy in Tianjin. With this positive outlook, they purchase more freely than more cautious middle-class Americans as long, as they believe they are buying a safe, high-quality product. Put another way, they don’t view themselves as middle class, but rather on the way to becoming rich.

They shop in a way that mirrors the shape of an hourglass. They either buy luxury products, or the cheapest products in categories they do not value. Brands positioned in the middle level, like Gap, get lost in the drive for Louis Vuitton or the cheapest items possible.

If there is a drawback to all of the love and attention being showered on Chinese women, it is that many in urban areas are becoming spoiled to a dangerous extent. Part of the problem is that parents who suffered during the Cultural Revolution don’t want their daughters to go through any hardship. They indulge their little princesses, rather than help them learn how to overcome any obstacles they might face on their own.

When the going gets tough, many parents teach their daughters it is better to get going and to run away from difficulties. When a job gets too hard or the hours too long, parents often support the mentality of quitting the job and finding another, perhaps in a state-owned enterprise where salaries are high and hours short. In interview after interview with multinational executives in China, I heard complaints about all of the otherwise bright and talented young Chinese women—and men, in many instances—who were unwilling and unable to tackle serious challenges. At some point decades from now, their lack of grit and determination to overcome challenges, and their willingness to take on debt, might cause China to face some of the same challenges that America is now.

The empowerment of women is one of the great developments of modern Chinese society, and is a further factor in the End of Cheap China. Women are becoming the key drivers of spending; they are beacons of optimism in the country, and a major force behind China’s transition toward becoming one of the biggest markets in the world. Western brand managers need to change their outdated notions about who the modern Chinese woman is and what she wants. Chinese companies are already starting to understand these powerful consumers, and are improving their brands to appeal to their values.