Consumption in China

How China's New Consumer Ideology is Shaping the Nation

LiAnne Yu

• Publisher: Polity
• Year: 2014
• ISBN:
  9780745684574
• Edition: 1
• Topic: Social Sciences
• Subtopic: Popular Culture
• Index: Social Sciences

Consumption practices in China have been transformed at an unprecedented pace. Under Mao Zedong, the state controlled nearly all aspects of what people consumed, from everyday necessities to entertainment and the media; today, shoddy state-run stores characterized by a dearth of choices have made way for luxury malls and hypermarkets filled with a multitude of products. Consumption in China explores what it means to be a consumer in the world's fastest growing economy. LiAnne Yu provides a multi-faceted portrait of the impact of increased consumption on urban spaces, social status, lifestyles, identities, and freedom of expression. The book also examines what is unique and what is universal about how consumer practices in China have developed, investigating the factors that differentiate them from what has been observed among the already mature consumer markets. Behind the often staggering statistics about China are the very human stories that highlight the emotional and social triggers behind consumption. This engaging book is a valuable resource for students, scholars and business professionals interested in a deeper understanding of what motivates China's consumers, and what challenges they face as more aspects of everyday life become commoditized.

1

Introduction

The first time I went shopping in China, I got yelled at and ignored. The year was 1990, and I was on a year-long foreign-exchange program at Beijing University, along with a group of a dozen other University of California students. We had studied Mandarin fervently, trying to perfect our Beijing accents. In our sociology and political science classes we had studied the transition from Communism under Mao Zedong to a free-market economy under Deng Xiaoping. And, just the year before, we had anxiously followed the news about the democracy movement and subsequent June 4th military crackdown on Tiananmen Square. But no one in our cohort had ever been to China, and the images that confronted us seemed contradictory. On the one hand, the city streets were packed with thousands of bicycle riders wearing unisex blue uniforms, a homogenous mass of working-class people. On the other hand, we were told that China was the new frontier for global multi-national companies. The country seemed to be in between worlds, still largely socialist in nature but with market reform taking root here and there.

Back in 1990, the shopping experience, however, still reflected what China had been, rather than where it would be in the next two decades. So, on that fateful first experience of shopping in a state-run store near campus, I asked in my politest Mandarin if the shopkeeper could show me some of the hot-water thermoses on the shelf behind the counter. Products in state-run stores were not kept out in the open where shoppers could browse on their own. The shopkeeper controlled access to everything. Alas, this shopkeeper felt that her newspaper was more important than me, her customer. I was left wondering if my Chinese classes had somehow failed me. At my fifth attempt to ask her if I could please see the water thermos, she suddenly snapped, uttered an expletive, and finally pulled the item off the shelf for me. After inspecting it I noticed that the lid did not screw on properly, and tried to ask her for another one. That was just too much for her. She scowled, put the thermos back on the shelf, turned up her radio, and simply ignored me. I never got my water thermos that day, and walked back to my dorm bewildered by that experience. It was my introduction to the surly service that was not uncommon in China's state-run stores, in which employment was guaranteed and shopkeepers had no incentive to please their customers or employers. An activity I had thoroughly taken for granted – shopping – had become something I had to learn how to do under a new set of circumstances.

In addition to the surly service, the state-run stores displayed little variety in goods. Snickers bars and Pringles chips, a staple for many of us young Americans, were hard to come by, except in specialty stores catering to foreigners. There were only a few TV stations available at that time – all of them state-run – featuring propaganda-laden programming. The wide boulevards of Beijing were lined with Communist party slogans and not the advertising billboards we were used to seeing back home. There were no malls or supermarkets, and no international chains such as McDonald's. For most everyday life products, there was little choice between brands or quality. Toilet paper came in one variety – rough and vivid pink.

There were options, but only for those with money, connections or foreign passports. The Friendship Store was state run, stocking imported items from the West, such as chocolate bars, peanut butter, and the otherwise forbidden copies of magazines such as Time. It only accepted foreign exchange as currency, and as such, was a tightly controlled space, not the kind of place where Chinese families could wander into freely. Luxury hotels had started to appear in the city as well. The New World Hotel featured one of the city's first authentic Italian restaurants (complete with a Filipino guitar player), a bowling alley, and a small market stocking canned foreign foods and imported toothpaste. Like the Friendship Store, the hotels were heavily guarded, and did not welcome the general Chinese public. Their customers were primarily Westerners, Japanese, and overseas Chinese.

In 1990, Beijing was not yet the cosmopolitan hub it would become in the two decades to follow. We foreign-exchange students elicited looks of wonder among the locals. Even those among us who were Chinese-American and could speak Mandarin fluently were easily identified as foreign through our dress, hairstyles, and larger builds. On buses, people stared at us in our Nike shoes, Levi jeans, and Gap t-shirts. It was not hard to become acutely aware of the economic disparities between us and our Chinese peers. This was most obvious in our daily living standards. We had access to hot water showers every evening in our dorms, while the Chinese students were only allowed access to the bathhouse once a week. We ate the good white rice in the foreign-exchange students' cafeteria, whereas the Chinese student cafeterias served rough, gray rice, sometimes containing small pebbles. We thought nothing of buying bottles of Coke with our lunch, while such expenditures were considered extravagant by our local friends. But what differentiated our circumstances was not just our relative wealth, but also our mobility. We were free to travel outside our country, so long as we (or rather, our parents) could pay for it. For the Chinese students, foreign travel was a very distant dream. Not only were their income levels too low, but the Chinese state tightly regulated travel visas. This first experience in China, and the view from the inside that my kind and generous Chinese friends gave me, made me realize how much I had taken for granted as a middle-class American with endless consumer choices.

We did not realize it then, but 1990 was a watershed year in China. Deng Xiaoping instituted changes that would hasten economic development, transforming the lifestyles of the country's residents – especially those well positioned in the biggest coastal cities of Shanghai, Beijing, and Guangzhou. In just three decades after Deng proclaimed that “to get rich is glorious,” China has gone from being one of the most isolated and poorest nations to the world's second largest economy, second only to the USA. This economic boom has two, interrelated facets. One is China's rise as a site of production for multi-national corporations taking advantage of the country's abundant labor in order to churn out competitive products that line retail shelves all around the world. The second is the increased spending power of Chinese nationals themselves, who consume an ever burgeoning array of goods and services.

A few statistics will demonstrate how far the country has come in just the last few decades:

• There are now over one million millionaires in China.
• China has taken over the USA as the largest car market in the world.
• In 2012, China overtook the US to become the world's largest market for luxury goods.
• The number of internet users in China has exceeded 457 million, nearly one and a half times the total US population. The number of mobile phone users hit one billion in 2012.
• Chinese tourists spent more on shopping while traveling in 2010 than tourists from any other nation in the world. Thirty percent of Burberry's sales in London are to Chinese tourists.
• China now has the largest number of home buyers every year.

(China Luxury Network, retrieved January 20, 2013)

One of the most reliable indicators of China's economic emergence is the intense interest that corporations have in selling their products in China. Market research as a field is booming in China, as foreign executives and marketers turn to experts on China's consumer habits to understand how they can expand their businesses. A sign that corporations take the Chinese market very seriously is the fact that instead of merely shipping their already successful products to China, they are also creating locally appropriate offerings. For example, KFC, the first Western fast-food restaurant to open in China, offers rice porridge with preserved egg along with its standard fried-chicken dishes. BMW, recognizing that China is now the world's biggest market for new cars, has developed sedans that suit Chinese consumer preferences. This means bigger back seats, where owners spend their in-car time, as employing chauffeurs is a common practice among the affluent. Haagen Dazs sells mooncakes alongside its premium ice-cream. Levi Strauss introduced a brand called Denizen in Shanghai, designed to fit Chinese body types. A trip down the yogurt aisle at WalMart reveals varieties made with such Chinese flavors as red bean, aloe, lychee, and even gelatinized donkey skin. In stark contrast to the dearth of products available in state-run shopping malls as recently as the early 1990s, today consumers can choose from a bewildering array of goods localized for their tastes.

Overview of the Book

This book explores the transformation of consumer experiences in China over the last two decades. Shoddy state-run stores have made way for modern, gargantuan malls featuring European, Japanese, and American luxury brands. Blue and gray uniforms have made way for global fashion brands. Even Communist leaders have abandoned the image of a simple, peasant lifestyle for European cars, French wines, and American-style suburban homes. China's new rich are attracting the attention of the world's companies, who vie for market dominance in everything from soft drinks to smartphones. Today, messages to consume more stem from everywhere. Advertisements are as relentless and ubiquitous as socialist propaganda posters once were in China's public spaces. Even the Chinese state encourages its citizens to spend more on vacations, cars, homes, and raising children, as a way to stimulate its economy. Chinese consumers are, in ever greater numbers, buying luxury goods, traveling abroad, and even celebrating the very un-Communist holiday of Christmas by shopping. When I visit Beijing's shiny shopping centers today, I cannot believe that my experience with the surly retail worker in the state-run store took place just twenty years ago.

However, while such changes are often discussed in celebratory tones, especially in business literature, consumer culture in China has produced a mix of consequences. The increased ability to buy things and the ever burgeoning variety of goods available have led to environmental degradation, corrupt practices, and food-safety issues. Areas of life that were once free of market influences, such as childhood education, housing, and gender identities, are now becoming thoroughly and relentlessly commodified (Schor and Holt 2000). Furthermore, after several decades of living under a strict socialist ideology in which wealth and signs of class difference were stamped out, inequality has come back with a vengeance, as the difference between the wealthy and the poor becomes exacerbated each year.

Consumer culture is thus complex and messy, providing delight, community, and freedom, as well as stress, competition, and the pressure of keeping up. This mixed dynamic is not unique to China. However, because of the scale of changes to China's economic, social, and technological structures that have occurred in an extraordinarily short period of time, we can observe radical transformations in people's everyday lives within just a generation or even half a generation. The compressed nature of China's consumer revolution, as well as the contextually unique circumstances of such changes, lead to consumer behaviors and expectations that do not necessarily follow the patterns of other developed markets. Whether Chinese consumers will develop “just like” consumers elsewhere in the world on some common evolutionary path is still to be seen, but in this book I explore how consumer patterns in China both validate and challenge established consumption theories.

This book is based on the observations and ethnographic research I conducted in China over a twenty-year period. I first lived in China as a foreign-exchange student in 1990, and after that returned regularly to conduct consumer research on behalf of global companies seeking to understand the market. Because of my own hybrid background as a PhD anthropologist working as a consumer insights strategist for Fortune 500 companies, I borrow inspiration from both the academic and business worlds. From academia, I borrow frameworks around the commodification of goods, identity formation, and social distinction. From business thinkers, I borrow frameworks focused on consumer aspirations and the symbolic values of brands and pro­ducts. In addition to ethnographic research with Chinese consumers, this book also reflects my conversations with consumer insights experts. They include academics, advertising professionals, and bloggers living and traveling across China (in one case, in a motor home). My goal was to base this book on a variety of perspectives, from the consumers themselves to outsiders with a range from analytical to personal views.

This book is not based on a large quantitative sample, with the aim of presenting definitive facts backed by statistically sound figures. Rather, it is based on qualitative research and deep dives into the lives of several dozen individuals with whom I have spent time over the years. This book highlights common threads and experiences around what people are consuming, why they make these choices, and what this says about who they are today and who they aspire to be in the future. As we shall see in this book, these stories and vignettes from their lives illuminate what it feels like and what it means to be a consumer in China today.

As it is elsewhere in the world, the topic of consumption in China is vast. Everyone consumes, from the newly minted billionaires to the rural poor. This book is limited primarily to China's first-tier cities, and within that, the bulk of the focus is on Beijing and Shanghai, where I have spent the most time and conducted the most research. This is certainly not by accident. The focus of my corporate clients has, for the last decade, been primarily on China's biggest, most cosmopolitan cities, where income levels are at the highest, and the numbers of middle and upper-class consumers are the largest. In other words, the primary focus of this book is on people who live comfortably and do not have to worry about meeting their basic needs around food, clothing, and shelter. They are consumers who have immediate access to whatever they may desire through myriad shopping centers as well as the world of e-commerce. At the same time, this book does not focus on the economic elite – China's millionaires and billionaires, who live extraordinary lives by any country's standards. Rather, the study is based on China's emerging middle and upper middle-class consumers. We will explore what this means in greater detail later on, but for now, I borrow a definition from Michael McCune, Director at Iconoculture, who defines the middle class as those who still need to make some tradeoffs between what they desire and what they can afford. What I appreciate about this deceptively simple definition is the focus on “tradeoffs,” which allows us to explore consumer constraints as well as opportunities.

My focus on urban, well-off consumers is not meant as an argument that they are the most important people to study when it comes to consumption in China. From a business perspective, China's base of the pyramid consumers represent a huge opportunity, as corporations vie to create the laptops, mobile phones, laundry detergents, and household goods that meet their functional and emotional needs as well as financial constraints. From an academic view, China cannot be truly understood holistically without exploring the lifestyles of the nearly 50 percent of the population that lives in rural areas, typically in conditions that have not changed much in fifty years. From a social justice perspective, China's economic “miracle story” must be tempered by the experiences of millions of migrants, urban poor, and working class who struggle to make ends meet as the state withdraws more of its social welfare programs.

Given the admittedly limited scope of this book, what I wish to do is bring to life the experiences of China's most “obvious” consumers – the ones that corporations covet and the Chinese state celebrates as a symbol of the country's prosperity. The period of time that my research encompasses – the early 1990s to 2013 – captures the perspectives of two distinct generations, representing very different consumer experiences. People who grew up under the most austere years of socialism are still alive, parenting and grandparenting, while their children, who have only known a prospering, capitalistic China, are coming of age, entering the workforce, and becoming fully fledged consumers themselves. Memories of life during the Cultural Revolution, when all signs of a bourgeois lifestyle were often violently stamped out, stand in contrast with the consumerist lifestyles of the present. This contrast is central to the exploration of this book. The consumer revolution today did not develop out of a vacuum, but rather in response to as well as in tension with the austere lifestyles of the very recent past. I have found that people in China, whether or not they are old enough to remember pre-reform lifestyles, are keenly aware of the fact that they are living in a remarkable period. By focusing on people's perceptions of change over the last few decades, and not just on the present, this book seeks to capture that awareness of transformation.

The transformation from Socialism to Consumerism

In order to understand the context within which China's current consumer culture has developed, let us briefly review China's recent history. By the early twentieth century, China had experienced the overthrow of its emperor by a nationalist government under Chiang Kai Shek, extreme pressure from the West to open up its markets, internal strife between regional warlords, and Japanese occupation during the Second World War. Mao Zedong, leader of the Chinese Communist Party, promised a restoration of China's dignity, self-reliance, and an end to the foreign imperialism that had ravaged the country. In 1949, the CCP defeated Chiang Kai Shek and established the People's Republic of China.

Once in power, the CCP developed a redistribution system based on a planned, top-down economy. Privately owned homes, businesses, and assets were seized. People's communes were established in the countryside, organizing peasants into large agricultural units. In urban areas, the CCP instituted the work-unit system, called the danwei, based on economic units such as factories and hospitals. Everyone belonged to a commune or danwei, which not only assigned and organized work duties but also provided for housing, meals, health care, education, and child care.

Most forms of free-market enterprises were banned by 1958. One's workplace thus determined people's standards of living. They allocated apartments, provided for social welfare, but also provided for most of the consumer items that had once been discretionary expenditures, such as entertainment and holiday treats. The state eliminated privately owned stores, restaurants, and entertainment centers. State-run stores provided people with basic necessities, which were distributed via a coupon system. The products in these stores, however, were limited, due to the country's increasingly isolationist policies in terms of global trade, and were thus in high demand despite their sometimes shoddy production. Life, for the average person, was characterized by standing in line, rationing, and scarcity (Naughton 1995). Those working in the stores were, like everyone else, assigned to their roles via their danwei, and had little incentive to serve their customers well (Otis 2012: 42).

What limited consumption options were available were subject to the critique and censure of not only the state but one's peers and family members. Such anti-bourgeois sentiment reached a high during the decade known as the Cultural Revolution, which lasted from 1966 to Mao's death in 1976. Mao called on China's youth to help him wage a violent class struggle against what he called the bourgeois elements, including his own enemies within the party. The youth organized themselves into Red Guard groups, persecuting anybody suspected of having a counter-revolutionary mindset or way of life. This included teachers, artists, writers, intellectuals, professionals such as doctors, or anyone who dared to speak out against Mao's extremism. Suspects were publicly humiliated, imprisoned, and tortured.

Throughout Mao's regime, the life of ordinary citizens revolved primarily around displaying the correct political ideology. Consumption practices became politicized and subject to public censure. Mao held up the unadorned, modest peasant lifestyle as the model for everyone on the path towards realizing a classless society. Women were called upon to exert their equality by cutting their hair, ridding themselves of make-up, hig...

Table of contents

• Cover
• China Today series
• Title page
• Copyright page
• Map
• Chronology
• Acknowledgments
• 1: Introduction
• 2: Spaces
• 3: Status
• 4: Lifestyles
• 5: Commodification
• 6: Awareness
• 7: Consumption with Chinese Characteristics
• References
• Index