Consumers - Made In China

Most consumers are familiar with the "Made in China" stigma - goods from toys to kitchenware, and now even cars, often derided as low-quality and often inferior copies of a far superior Japanese product. This is not likely to last though. If you were to ask anyone over the age of 60 if they recall jokes about goods "Made in Japan" during their days, they would be able to recite a raft of ridiculing, quick one-liners - a sign of how countries can re-invent themselves and continue to improve with determination and direction. The Japanese association with quality and success is now well-documented history, and anything produced from that country is looked at with respect and often awe - from their cars to their food. In another ten to fifteen years, China will likely have re-invented itself as well.

For the last thirty years, China has been the world's factory. This factory has produced goods for primarily one consumer, the now-infamous US Consumer. What if someone was to tell you, however, that your target audience would no longer exist in ten years, or at least would no longer be able to afford to buy half as many goods as they used to in two years? China has already questioned this issue and is beginning to alter their model and adapting their ideology from making things for everyone else, to making things for themselves and everyone else.

Hong Kong has long been a rather different place to the rest of China, much like even Shanghai and Beijing are vastly different as two cities within one vast country. HK of course is historically different largely due to the UK’s influence which only ended back in 1997. On a recent visit to HK and Asia’s answer to Las Vegas, Macau, the clearest expression (some would call it experiment) of the potential power and might of the "Made in China Consumer" was on very “in-your-face” display.

Hong Kong has always been a showy city, building bigger and better towers a favourite pastime - sorry Dubai, but HK got there long before you and not only perfected the “suspension of economics” model to last for many more years, but ended up with far more iconic buildings. Designer brands are a dime-a-dozen, and the fashionable parts of town heave with an overpopulated (7.5m est) people sporting the latest clothing and other accessories. It is very much a conspicuous consumption island, and it is on display for all to see at every opportunity. For a territory with fewer roads than one-sixth of New York, there are an impressive number of luxury cars - a common sight being children driven to kindergarten in their daddy’s Rolls Royce, even as the crowds surrounding them are offering their wares on street stalls trying to make ends meet by taking precious HK$s off the thronging tourists. Top-class restaurants, with top-class prices, nestle amidst local eateries where a full meal sets you back what it costs to buy an apple in Dubai, and luxury hotels and apartments spring into the air, leaving in their shadows sprawling, overcrowded “affordable” housing.

Even as a city of contrasts, the desire and very apparent “joie de vivre” of HK’s inhabitants is manifest - none more so than when the sun drops. As day turns into night and the haze of the harbour overlooking Kowloon subsides, HK’s revellers come-out-to-play. Unlike in other ex-pat cities though, HK’s biggest revellers are the Chinese themselves. They are found propping up against all the best bars and occupying all the best tables in the top clubs. In one of the most prestigious clubs frequented by what can only be described as the tastiest of the dim-sum on offer, I found myself one of only a handful of fortunate “gwailo” (foreigners) in a room swarming with at least five hundred. When enquiring whether I had stumbled upon a certain themed evening, I was told “the gwailo can’t really afford to party in here” – wow, it was an eye-opener to a city that for so many years had been run by foreigners but had now become a true power-centre for the immensely rich and powerful Chinese.

A cursory visit to Macau will make a convert out of anyone that does not believe the Chinese are big spenders. Revenues in Macau out-generate those of Vegas, and when you walk into one of the brand-new gleaming Wynn, MGM or Venetian Casinos, you’ll immediately understand why. Although the game of choice is Baccarat rather than (the much more exciting and rewarding, I think) Black Jack, the amounts bet on each hand are impressive. Where many of the “whales” in Vegas are traditionally from abroad (Japanese, Arabs and Russians) all the high-rollers in Macau are from the Chinese mainland. The real surprise comes from watching the winners (or even the losers for that matter!) spending huge sums of money in the many boutiques across the shopping malls craftily connected to the gaming floors. When the Chinese spend, they are as voracious in their appetites to purchase, as they are efficient in the art of mass production.

So there is no doubting that as China begins to shift into a higher gear of domestic consumption, which is for all intensive purposes running at pitiful levels, the world will be shocked by just how much money they have. What some may doubt though, is just how important a city like HK and even Shanghai may be to the rest of the world. Well, in an article today in the FT, it was discussed which city may prove to be the world's next global financial hub. Apart from a lack of mention of Dubai, or any other Middle Eastern city for that matter, was the premonition that Shanghai, and on top of that even Beijing, may take on the mantle that has so far been loftily held by either London or New York.
China’s State Council recently endorsed a plan to turn Shanghai into a global financial centre by 2020. This need not be at the expense of Hong Kong and Singapore. Shanghai may complement HK just as Boston, Miami and San Francisco do New York.

A prominent HK resident, late on a Sunday afternoon as he was heading back home after an afternoon spent at the Macau tables, pointed out the new buildings being constructed on the mainland side of HK, Kowloon – “this is all being built by China” he said, “we don’t need anyone else to come and lend us money, give us advice, or even provide labour to help construct the cities. What we need is people to quickly understand that they need us more than we need them”.

The "Made in China" label is well on its way to becoming known for a totally different product - the Chinese consumer. If you believe what many do after they return from a trip to China’s demonstration cities, the world needs them sooner rather than later.