Starbucks, with Chinese Characteristics

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IMG_0848.JPG“With Chinese characteristics” was a phrase that we heard a lot in China — as in, they’re embracing Capitalism, but with Chinese characteristics, or, they’re building an open source software industry, but with Chinese characteristics. Ultimately, it means that as a nation they’re doing more things that the Western world has done for a while, but in a way that may appear Western, and use the same words to describe it, but ultimately is something different.

In Shanghai I was struck by the intense consumerism: there were Ferrari & Mercedes dealers everywhere, there were legitimate high-end fashion stores on both the street and in 10-story shopping malls, and, of course, there was a Starbucks (with Chinese characteristics) on every corner.

The Starbucks stores were notable in that they sell basically the same set of stuff as everywhere else for food & drink, have the same set of coffee mugs & travel mugs (often manufactured in China for sale around the world), and everything sells for essentially the same prices as they do here in the States. A latte is 24 RMB (about $3). A travel mug is about $12. Presumably a Mercedes costs a lot, too, although I didn’t check. (Fun fact: Audi A6s were everywhere in both Beijing and Shanghai — actually they were A6 Saloons, or A6L (for long) — I understand that the A6L plants are primarily in China.

And every one we went to or walked by (a lot of them) was packed. Much more crowded than any I’ve ever been to here in the US.

I think that’s somewhat emblematic of my experience in Shanghai — relative luxury items, priced at US prices, with extremely high demand. (There were plenty of fakes markets as well — which also had a lot of folks — but not as many as the legitimate vendors.)

It’s a strange thing, though — I think twice before paying $3 or $4 for a cup of coffee (which doesn’t keep me from doing it regrettably often), but I’m pretty sure that salary ranges in China, even in the cities, are nowhere near what they are in Japan, the US or Europe. (There was a newspaper report while we were there that Guangzhou (I think), one of the major cities in the South with more than 5M people (which makes it bigger than Toronto, Philadelphia or San Francisco) just crossed $10,000 USD in annual per capita income.)

It seems to me that this will inevitably drive wages higher (and thereby costs of doing business in China), which has been widely reported, with tech companies moving manufacturing to Southeast Asia for lower costs. But more than that, it seems to me that this is a major impediment for China to create what popular press is terming as the largest middle class in the world. If wages don’t accelerate to catch up with prices, being middle class won’t exactly mean what it does here. (Related obvious thought: being middle class here in the States isn’t what it used to be either. Coffee at $3 or a tank of gas at $50 should illustrate that point quite well.)

9 Replies to “Starbucks, with Chinese Characteristics”

  1. Sorry to keep commenting, I just don’t get to see you everyday :)I had this conversation with friends of mine who just became parents. Middle class used to be (?) where one parent could work and the other could stay at home and watch the kids. That’s no longer the case for middle-class, certainly in the Bay Area/Valley. If both parents *have to* work, that’s not middle class. Keep going on China if you have more stuff to write. Very interesting. (and ugh, Starbucks).

  2. One of the “Chinese characteristics” of Starbucks in Shanghai was the pair of steel chains and latches that were affixed to the bottom of each table. I assumed that they were for women to hook their purses to so that they could not be stolen easily by a thief. Can’t imagine what else it could be for.

  3. Sorry to keep commenting, I just don’t get to see you everyday 🙂

    I had this conversation with friends of mine who just became parents. Middle class used to be (?) where one parent could work and the other could stay at home and watch the kids. That’s no longer the case for middle-class, certainly in the Bay Area/Valley. If both parents *have to* work, that’s not middle class.

    Keep going on China if you have more stuff to write. Very interesting. (and ugh, Starbucks).

  4. One of the “Chinese characteristics” of Starbucks in Shanghai was the pair of steel chains and latches that were affixed to the bottom of each table. I assumed that they were for women to hook their purses to so that they could not be stolen easily by a thief. Can’t imagine what else it could be for.

  5. The difference between income and the cost of luxury goods probably isn’t quite so stark in Hungary as it is in China, but Hungarians make less than half of what Americans make (according to the UN Human Development Report 2006: http://hdr.undp.org/hdr2006/ ) yet pay the same or more for clothing, cars, CDs/DVDs, cell phones, etc.Nevertheless, Hungarians also enjoy national health care, much cheaper housing, and great public transportation, while the American middle class seems saddled these days with large costs for all these items (especially on the coasts).I have that same hesitation about a $3-4 coffee, but I bet that if I owned a home outright, got basic health care from the government, and didn’t need a car to get to work, then I’d be much less hesitant.Perhaps there are some similarities to the situation in China.

  6. The difference between income and the cost of luxury goods probably isn’t quite so stark in Hungary as it is in China, but Hungarians make less than half of what Americans make (according to the UN Human Development Report 2006: http://hdr.undp.org/hdr2006/ ) yet pay the same or more for clothing, cars, CDs/DVDs, cell phones, etc.

    Nevertheless, Hungarians also enjoy national health care, much cheaper housing, and great public transportation, while the American middle class seems saddled these days with large costs for all these items (especially on the coasts).

    I have that same hesitation about a $3-4 coffee, but I bet that if I owned a home outright, got basic health care from the government, and didn’t need a car to get to work, then I’d be much less hesitant.

    Perhaps there are some similarities to the situation in China.

  7. Uniform and familiar in every way, your Chinese Starbucks experience will not disappoint. Just like home, they’re everywhere (one has infiltrated the once impenetrable Forbidden City- an ironic monument to capitalism in what is considered the heart of the PRC). Don’t worry about where you are, or how interesting it might be…you are home now.—————————— HazelGuaranteed ROI

  8. Glad to see someone else gets the point. China is more much capitalist than it may appear Communist. This kind of sovereignty poses challenge to many Western-based businesses who now have to fear being overtaken by Chinese competitors.It's time for the West to learn something from the East.

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