Ideas

Ideas | Q&A

From ‘Made in China’ to ‘Bought in China’

The global market shifts toward a new consumer base

Chinese shoppers carried a flat screen television along a road in Beijing in September.

MARK RALSTON/AFP/Getty Images

Chinese shoppers carried a flat screen television along a road in Beijing in September.

We read the phrase all the time, even if we’ve long since relegated it to the part of our brains that processes parental warning stickers or emergency-landing procedures: MADE IN CHINA.

China, for most of us in the West, is where things are manufactured, and here on the other side of the Pacific is where those things get bought. That organization of the world is a way to make sense of the big changes we see: America’s deindustrialization, the rise of our tech and service sectors, and China’s growing appetite for energy and resources. It is also a comfortable place to be: If you’re the world’s top consumer, then everyone else is worried about providing the things you want.

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But what if the arrow were to turn, and China, brimming with a population of over 1.3 billion, started buying with a vengeance? What if China became the place that manufacturers looked for their cues?

That question is quickly turning from a what-if to a how-soon. Hundreds of millions of Chinese want the sorts of things we want — from televisions and washing machines to bottled water and organic food — and more and more of them are turning those wants into purchases. China’s annual consumer spending is now around $4 trillion; though still only half the US figure, it is already a bigger consumer economy than Japan and close to that of the European Union. China is now the world’s largest consumer in a number of categories, including beer, cigarettes, and — remarkably — cars. Some Western automakers have begun skipping US and European markets and debuting models in China first.

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Karl Gerth, an East Asian studies professor at Oxford, has traveled to China many times in the past 25 years, building a body of research on China’s consumer history and habits. He has amassed data and interviewed colleagues and strangers alike about what they buy, what they’d like to buy, and how it’s all changed over the years. His latest book, “As China Goes, So Goes the World,” now out in paperback from Hill & Wang, documents China’s massive shift in lifestyle and spending.

Gerth draws a picture of a consumer culture that in some ways remains vastly different from the West’s. The state still plays a huge role in directing the manufacturing economy and prodding certain kinds of consumption. A long-held culture of saving means the Chinese are a long way from our comfort with credit and household debt. But some of the trends are familiar: Chains are spreading through the country; advertising is increasingly shaping consumer tastes across China’s diverse regions; golf and skiing, formerly the provinces only of the super-wealthy, have begun to attract middle-class fans. And as a token of prestige, the classic Chinese liquor Moatai is swiftly giving way to a taste for cognac.

Gerth spoke to Ideas from his home in Oxford, England.

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IDEAS: Why do we need a book on Chinese consumer habits?

GERTH: I’ve always been more interested in consumerism as a historical mover than large-scale bureaucracy. I was asked recently why so many Chinese are showing up in the UK, and why they can’t stock the shelves fast enough with Louis Vuitton handbags. One of the reasons is that foreign brands are heavily taxed at home and Chinese believe that the products overseas are cheaper and less likely to be knocked off . . . .Consumer spending from Chinese has grown so much that it’s prompted business interests to lobby governments to relax restrictions on Chinese travel.

IDEAS: How long before we stop thinking of China as the great producer, and ourselves as the consumers?

Oliver Haste

Karl Gerth of Oxford University is author of "As China Goes, So Goes the World."

GERTH: It’s in the early stages of that reversal. One very easy speculation for me to imagine is a time in the not-too-distant future when people go to China not because they want to see the Great Wall or the Forbidden City but for the best shopping opportunities. The best brands will be made for the Chinese market, available to the Chinese markets first, and will influence the global tastes and trends in fashion. Think of the Japan wave of the 1980s . . . in 2009, China became the world’s largest car market. In 2010, it grew 40 percent over that. So they’re the ones buying the cars and making the cars.

IDEAS: For the Chinese, it sounds like the “Made in China” label isn’t necessarily something they like to see.

GERTH: In China, foreign always suggests better and more reliable. Over the 20th century, people tried to privilege Chinese products and branding Chinese-made stuff. All these institutions try to push people in that direction, but that doesn’t mean it works . . . .About three years ago there was a big nationalist anti-Japanese student protest in Beijing; most of [the protesters] were carrying one Japanese electronic product or another. They were actively advocating to get Japanese products off the market, but using them at the exact same time.

IDEAS: What’s the experience of shopping like for the average middle-class Chinese consumer, especially given the prevalence of counterfeit products?

GERTH: Anxiety is a major factor. You inspect stuff with a lot more attention. In China, they’re constantly worried about these things being fake, whether it’s handbags or medication....The old Chinese greeting of “have you eaten?” has been replaced with “how much did you pay for that?” or “where did you get that?” It’s a real preoccupation.

IDEAS: But at the same time as there’s this freewheeling street culture, it sounds like there’s also firm state control.

GERTH: China is making sure that foreign multinationals don’t own all the brands that people have brand allegiance to. They’re not going to let nature take its course and the best mousetrap win out. That can happen either in building or buying national brands, or they can get Boeing, for example, to bring manufacturing and R&D over there, so even if the product is American, it’s becoming less and less American all the time.

IDEAS: Beyond the urban middle class, China has a massive rural population. Are they part of the consumer class?

GERTH: In rural China I asked this guy whether he had heard of McDonald’s and Kentucky Fried Chicken and he pointed to his television set. So even though he has no access to this stuff, it’s still in his life. They’re all starting to get the idea that they need fast food or bottled water or organic products, long before they have the actual ability or money to get it.

IDEAS: Is the ethic of saving keeping a lid on Chinese consumers?

GERTH: Rather than simply saying the Chinese are Confucianists and Confucianists save money, I’d say there are very specific things that make them anxious, and so they save money. So they save for a place to live, for their kids’ education, for unforeseen medical expenses, and retirement. This is something that people who used to work for state industries never had to worry about, because it was provided. The state is now toying with the idea of reinstating these safety nets — not out of the goodness of their hearts, but to free up capital so that people will spend more money.

IDEAS: It sounds like a lot of what they buy isn’t driven by practical concerns.

GERTH: There’s been a huge uptick in costume sales to China from the UK, so I asked a Chinese friend why and he said, “Well, one of the ways in which you establish that you’re not a redneck in China is one, how many countries have you been to, so people brag about the number of countries they’ve been to; and two, familiarity with Western culture, which includes a holiday like Halloween.”

IDEAS: So a new market and a new holiday?

GERTH: I have a picture somewhere from 1986, the first time I saw a Santa Claus holding the Communist flag of the PRC and my head almost exploded. Now it’s commonplace there.

IDEAS: In the West, we’re used to seeing products clearly made for our tastes and lives. Your book suggests that this may not last.

GERTH: My prediction is that the assumption that every product in the world is made for us and for everyone else it gets a slight modification is shifting over to China and the rest of Asia. For example, the back seats of cars are going to get a whole lot more luxurious and comfortable, because very few Chinese want to sit shotgun, especially given how dangerous their streets are, but the position of power and authority is usually in the back seat. Right now they’re designed for children, but in China people sit in the back, and virtually everyone who can have a luxury car has a driver.

But there’s also the other direction for it, where you’ve got this innovation in whatever realm, and it might drift back here . . . .My number one prediction about China that I didn’t include in the book is that the Chinese people have endured so much unbelievable change, they’re going to produce the next Shakespeare, the next Dickens, just due to all this tremendous change and turmoil. There could be this tremendous wave of innovation unleashing entrepreneurial opportunities. Scores of Sonys or Apples, that they’re going to create all this stuff. Trends, fashion, art — you can certainly see it in the art world — that will change the world.

J. Gabriel Boylan is an assistant editor of Harper’s Magazine.
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