DATELINE: CHINA

A showcase of consumer emancipation

Daniel Burstein April 18 1983
DATELINE: CHINA

A showcase of consumer emancipation

Daniel Burstein April 18 1983

A showcase of consumer emancipation

DATELINE: CHINA

Daniel Burstein

There is a store display along Peking’s Wangfuging Street that never fails to attract passers-by. A window topped by a purple canopy inscribed with white letters that spell out “Seiko” showcases the latest in designer timepieces. A decade ago such a store would have had its windows smashed by zealots of Mao’s Cultural Revolution in a matter of minutes. Now, however, a steady stream of Chinese customers, many of them still Maosuited, delight in the early flush of a consumer revolution by buying their first watch. Emancipated from the purism of the Cultural Revolution, more and more Chinese citizens finally have cash in their pockets and a proliferating choice of goods in the stores.

Figures for 1982 show that China’s domestic output of television sets reached close to four million, while washing machines topped one million. Although both statistics are minuscule compared to China’s 200 million households, they represent a 600-per-cent increase in production since 1978—the year before Vice-Chairman Deng Xiaoping and his brain trust took over the leadership of the Communist Party and began implementing their pragmatic economic reforms. Eighty per

cent of the 20 million black-and-white TV sets ($800 each) now in use have been bought since 1980.

Currently, the “three big pieces” (television, refrigerator and new bedroom set) supplant the “three little pieces” of the past (watch, radio and

sewing machine) as the consumer goal of every family. Although many homes do not yet have their three big pieces, it is not always because of a lack of cash. Many who could now buy black-andwhite televisions prefer to wait until they can afford a color one or until a relative brings one from Hong Kong as a gift. Notes Zhu Xinzhen, an economist who estimates that city dwellers have an average bank savings of 371 yuan ($227): “In other times people would be emptying their bank accounts to buy new products for fear they would not last. But now people are confident the new policies will last and they prefer to wait for still better-quality items at lower prices.” The state’s populationcontrol program is also putting more purchasing power into the hands of young urban couples with fewer dependants to feed than preceding generations.

China has not become a consumer paradise by Western standards. No private individual owns a car. The country still faces severe shortages of many necessities, such as meat, sugar and cotton. The kinds of consumer choices that have evolved in the big cities are still unthinkable in large parts of the countryside. But compared to the recent past, when diversity of goods and personal conveniences was considered synonymous with evil, China has developed its economy at a rapid pace. In January, Peking opened its first “super-

market,” which stocks some 265 items. Compared to a Canadian supermarket, with 12,000 products, it hardly seems super. Yet to the average Chinese, who has spent a lifetime queuing first for cabbage in one shop then for turnips in another, it is a temple of modernity.

Pay phones, ice-cream parlors, taxis and stores selling women’s underwear have all recently made their debut on the Chinese scene. “Free markets” have cropped up—on specified days of the week peasants sell high-quality produce and handicrafts directly to the urban consumer instead of to the bureaucratic state distribution machinery. Although cotton goods are still rationed, a far greater variety is now available. Sunglasses, polka-dot prints and home permanents have become commonplace among the youth of such big cities as Peking, Shanghai and Canton, often giving those areas the appearance of a 1950s North American high school campus. Advertising reappeared in 1981, and now billboards dominate major intersections.

For the first time in their lives Chinese factory managers are concentrating on marketing techniques. Before the 1979 economic reforms, central planners set factory production quotas. They also arranged for 100 per cent of the output to be presold. Explains Pan

Cheng-lieh, deputy director of a recently formed organization of factory managers: “Profits made by the factory were taken by the state, and any losses were subsidized. Given those circumstances, it is no surprise that managers never thought about marketing.” Now, however, Chinese economists are experimenting with a system that allows central planning to define broad parameters of operations yet allows individual factories, farms and stores to keep a significant measure of the profits they generate.

In January nearly 400 shops in Peking adopted the so-called “responsibility system” under which pay is directly related to performance. Government officials hope that by 1985, 72,000 restaurants, hotels, barbershops, bathhouses and tailors will be on stream with the new system. With their losses no longer subsidized and the profit-sharing principle established, Chinese managers are in a rush to learn all they can about marketing, advertising, market research, quality control, inventory control and a host of other long-neglected skills. At the northeast coastal town of Dalian, 500 km from Peking, the Chinese and U.S. governments set up a cooperative school to offer mid-career Chinese managers a condensed version of a master’s program in business ad-

ministration. Said Richard H. Holton, a professor at Berkeley’s School of Business Administration who served as dean at the Dalian project in 1981-82: “Chinese managers have become fascinated with forecasting, marketing, learning how to develop a sales force and how to assess customer needs. We are starting to see factory representatives actually working behind the counter in department stores to test consumer reaction. It is a crude form of market research, but that is exactly what it is.”

Although domestic travel was a rarity until recently, Chinese are becoming tourists in their own country. Honeymooners take advantage of special package deals for newlyweds and flock to romantic spots like the famous gardens of Hangzhou and Suzhou near Shanghai. When the personal travel phenomenon began in 1980 it was the bane of the Chinese housewife’s existence. Relatives would show up unannounced to be fed and housed. But there is now a network of low-priced hotels in the big cities. As for feeding the relatives, a new innovation is enjoying great popularity—Chinese take-out food.

The incipient consumer revolution has remedied glaring shortages of necessities and provided a small measure

of convenience to the drudgery of daily life. But some Chinese leaders are concerned that the improvements may produce undesirable effects. Officials worry that young people, who are coming of age in a time of plenty, may be too flabby to cope with the sacrifices that would be demanded if China should fall victim to bad harvests, natural disasters, a pullout of its new Western investors—or a new war. Chinese leaders, aware of what has happened elsewhere in the Third World, know that expectations tend to rise more rapidly than governments can meet them. As a result, they are trying to temper the drive toward personal prosperity with renewed propaganda to emphasize the “spiritual” aspects of socialism and a critique of decadence in Western societies. There is also concern that the old guard of leftists—most of whom have been politically banished but some of whom remain in the wings of powerwill capitalize on the negative effects of China’s new materialism to argue for a return to the political straitjacket of the past.

Indeed, there are already negative side effects. Prostitution, gambling and street begging have re-emerged. In January two prominent cases of economic crimes were resolved by the execution of the individuals involved—an accountant who had embezzled $300,000 from the bank where he worked and a Guangdong man who brokered exit visas for people who wanted to go to nearby Hong Kong. Last July a vice-minister of the chemical industry was stripped of his position after authorities discovered that he was involved in illegal dealings with Hong Kong businessmen. Declared Zhao Fusan, one of China’s best-known social scientists: “We have to face the fact that affluence does not mean happiness.” Added Pan Cheng-lieh: “If the meaning of life is to get a TV, what do you do after you have one?”

Ideally, China’s leaders want to raise the standard of material life but still maintain the political dedication and spirit of self-sacrifice that characterized the past. They do not fear that Western social problems will take hold on a mass scale because they do not expect to obtain anything close to Western standards of living, even with their campaign to modernize Chinese industry, agriculture, science and defence,by the year 2000. Said Ji Pengfei, one of China’s senior statesmen: “Today our per capita annual income is about $200. Vice-Chairman Deng Xiaoping has said that maybe we could reach the figure of $1,000 per person by the year 2000. Of course, that is not really very affluent.” Still, he added, “Considering that we have a population of one billion, it would really be miraculous if we could achieve it.”