SHANGHAI (AdAgeChina.com) -- A year ago, I predicted the year of the rat would prove to be a "bit more complicated" then the previous pig year. I also warned people to "expect some chaos, both the good and bad kind." Perhaps I should consider a career in fortune telling or Chinese astrology?
2008 certainly was a tough year for China, and one marked by nonstop tragedies and disasters, interspersed with that fun little sports party last August. One friend refers to 2008 as the E-O, E-O year. That's short for "earthquake-Olympics, economy-Obama."
Unquestionably, the big story rolling into the year of the ox is the economy. A recent study among 1,000 Chinese by Jigsaw looked at attitudes toward the current situation and the results were sobering. A whopping 90% of urban Chinese, ranging from Shanghai down to third-tier cities like Putian in Fujian province, are concerned about the direction of the economy.
Four out of five people have already started to change their spending habits. Parents are delaying buying new TV sets, for instance, and for some, year-end bonuses have been halved, even at companies that haven't shown any revenue decrease.
As recently as last fall, parents in big cities might have given teenage kids anywhere from RMB 600 ($88) to RMB 1,000 ($146) for monthly pocket money. That number seems to have dropped rapidly, and some teens have seen their allowance drop to zero. The traditional red envelopes of money handed out to young people are also expected to be smaller, as prudence holds back the generous hand of family members.
To their credit, most kids are taking the hit to their allowance in stride. China is a family-oriented culture and during an economic crisis, everyone has to do his or her part, right? Maybe, there's only so long they can put off buying the latest pair of hip shoes, and then the trouble starts.
The short-term deprivation we're seeing appears tolerable to young and old because of the underlying optimism of the country. Panicked newspapers tell of tumbleweeds blowing through abandoned southern factories and college grads stampeding job fairs. In spite of all the dire news, three out of five people Jigsaw interviewed expect the crisis to abate within the next six months.
For now, fiscal conservation is all about pragmatic austerity, and this is where we see a real difference in the Chinese and western mentality. Take the phrase "time is money." To westerners imagining a fast-talking boss blackberrying on the treadmill, the phrase is a warning that wasting time wastes money. It is a call for efficiency.
In China, however, it means quite the opposite. Time is money indeed -- but among Chinese, the expression conjures up retirees with empty afternoons or rural youngsters monotonously "gold-farming" in online worlds to collect rewards that can be sold to overseas buyers.
(Gold-farming is the practice of spending all day playing online games to collect money by killing enemies, etc. and then selling online-only virtual gold coins in exchange for real cash. That means a a busy western banker can spend $20 to buy thousands of online gold coins, with which he can buy clothes, accessories or better weapons for an online game character.)
Spending time is a way to increase money. We see it in our shopping studies too. As the economy has gone down, people are reporting an increased interest in searching for online promotions and hunting down the best bargains.
Young people are furiously sifting through online auction sites to locate their dream dress or bag at a lowered price. Hours of searching for a few dollars in return is the norm, but time is plentiful.
Significantly, at this point we don't see a lot of trading down. There are some categories in which people are looking for cheaper brands, especially discretionary items with a wide range of options like clothing and perfume.
In other categories, however, people remain relatively hesitant to buy cheaper brands. Some areas have special circumstances: any interest in lower-priced snacks is quickly squashed by memories of recent food quality scandals.
It's important is to understand the underlying psychology behind this behavior to make the right marketing choices during this downturn. Yes, the economic crisis is grim, and no, it is not abstract. While it may be more visible in the south, forced unpaid holidays and idling assembly lines are becoming the norm across the country.
But a thirty-year rush of prosperity has transformed the nation. For many people, the pleasure of buying global brands is their right. It is part of the promise of national success. To abandon these brands for cheaper, often local, products would be an acknowledgment of something dire indeed. To date, it doesn't seem that is happening. Optimism still runs the country, but for now it is laced with a thick streak of pragmatism.
The fat pig year becomes the chaotic rat year. Next week, the pink tail of the rat officially disappears into its hole, and the warm wet nose of the ox snuffles into sight. The ox is a comforting sight too. It's a pragmatic and solid worker who brings prosperity through hard work, as well as a bit of coupon-clipping here and a few hours of bargain-hunting there. It looks like the ancients got it right again. Maybe I should consider that career switch.
P.T. Black is a partner at Jigsaw International, a boutique lifestyle research agency in Shanghai that looks at the direction of change in China, particularly among young adults.
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