Living Through China’s Consumer Revolution
Sarah Li Cain
Shopping is evolving in China.
By 2026, 500 million Chinese citizens will be categorized as “mainstream,” or middle class, with the purchasing power to match, according to marketing research firm McKinsey and Company. And even as the economy cools somewhat (growth dropped below double digits last year for the first time in decades), societal values are shifting to accommodate this new wealth. One McKinsey study revealed that in 2013, fewer than half of Chinese consumers believed shopping was a worthy family activity. By 2016, two-thirds thought it was a great way to spend time with loved ones.
In the nearly 10 years I lived in China, I witnessed this rapid consumer revolution and how it affected urbanites, migrant workers, and scores of young people trying to make sense of a completely foreign approach to financial freedom.
The rise of ‘retail-tainment’
When I first arrived in Shenzen in 2008, it was common for expats like me to hang out in each other’s cramped apartments, or go to a nearby street market together to purchase ingredients for humble, homemade meals to share. Then things started to change.
Those small open-air markets were replaced by the shopping malls I was used to back in the United States. Dinner at home was replaced by meals at the restaurants of five-star hotels. And most of the local 20-somethings I befriended started to see shopping as less of a necessity and more of a hobby. In fact, many of my friendships became based around shopping, going to different markets and buying handfuls of novelty items (my vices were keychains and embroidered accessories from Northern China).
For expats, there’s nothing like the feeling of familiar spaces, so in a way it made sense to want to spend my free time shopping at the local mall. But for my Chinese friends, shopping for entertainment was new.
Older Chinese citizens—including the parents of many of my friends—came of age during a period of economic and social upheaval under communist leader Mao Zedong. During the late 1950s to early 60s, Mao’s Great Leap Forward policy collectivized nearly everything, including farm lands and food. Rural communities were forced into communes, resulting in widespread famine that, along with state-sanctioned incarceration and torture, killed an estimated 30 to 45 million people. As the Great Leap Forward faltered, Mao enacted the Cultural Revolution to purge from the country both Mao’s opponents and anyone seemingly in favor of capitalism, in an effort to revitalize loyalty to communism. Students and urban workers joined the Red Guard, which violently targeted anyone seen as overly educated, wealthy, or posh, plunging the country into bloody chaos. To curb the violence—and win back favor of the people—Mao sent more than 17 million urban youths to rural areas for “re-education” and forced labor.
After Mao’s death in 1976 and into the ‘80s, sweeping policy changes allowed a freer market, but a generation of Chinese citizens was still reeling and struggling to make ends meet. However, their children were born into a new economy. My friends now in their 20s and 30s are just beginning to earn enough money to spend at their discretion and as the first generation to come of age under the new pro-market forces, they’re largely embracing their role as economic engines.
It was something Russell Smith, a British e-commerce marketer who married a local and has lived in China since 2009, has noticed as well. “China has been manufacturing for other countries for so long,” he says. But now, “there’s a new sense of confidence and trust, and people are embracing malls and other retail developments into their everyday lives.”
For many in China’s growing middle class, that willingness to spend stems from a few key societal shifts. For one, many adults have more disposable income than generations before them. Before the economic reforms in the ’80s, China had fallen behind economically compared to other developed nations and most of the nation’s industries were state-owned with strict pricing controls and regulations. When economic reforms went into action, many industries and “special economic zones” like Shenzen were given more control over pricing and foreign investment. This meant more opportunity to earn money, and to spend it.
While it started with KFC in 1987, name brands from all over the globe are selling up a storm in China’s massive marketplace today. And if Chinese consumers can’t purchase a coveted item at home, they’re willing and able to pick it up internationally. In fact, the Japanese even made up a term—bakugai—for mega-shopping sprees carried out by Chinese tourists.
Remnants of the consumer revolution
While shopping is fast becoming an important national pasttime, it doesn’t mean that the Chinese are frivolous with their money. Many of the people I met in my time there were careful spenders, saving up to pay for large purchases, and dutifully considering what they bought. This may be a holdover from their parents and grandparents, when frugality was necessary both economically and as a way to avoid persecution.
A 2016 report by Chinese market research firm Daxue Consulting found that members of the older generation born well before modern economic reforms (and who were not among the lucky elite working for government enterprise) were particularly price sensitive and careful with spending. A 2016 McKinsey study including more than 10,000 interviews ranging from 18 to 56-year-olds across 46 cities found that saving money and focusing on family and home life were key goals for most of the population. Three-quarters of respondents said being successful meant having a happy family, and 64 percent lived below their means.
While I may have gone a bit spend crazy shortly after I moved to China, my perception of value changed as I met more people from different walks of life and saw how much indulgent purchases meant to them. Once, my husband and I caught a taxi home after running errands. The older taxi driver was so excited to meet Americans that he started asking my husband and I a barrage of questions comparing the U.S. to China. All of a sudden, he stopped his good-natured interrogation and stuck his right arm in my face, asking me to look at his watch. As I stared at the gold-plated strap and the brand name on the face, he proudly told me he had saved up for a long time and recently asked his friend to buy the watch for him in Hong Kong. He then pressed me to ask my husband, who spoke no Mandarin, whether he thought it was an expensive watch. When my husband confirmed that it was, the man beamed with pride.
Shopping in Hong Kong is considered a status symbol. Permits are required to travel to the area, and the permit price depends on where you were born in China. While other people can shop for you and bring the goods back across the border, just affording the luxury goods sold there can take months of frugality.
“I’m so excited I was able to ask my friend to purchase this watch for me,” he exclaimed. “I can’t wait to show my wife when we see each other during the holidays.”
I noticed that the longer I lived in China and met people like that taxi driver, the less I wanted to go shopping just for fun. Instead of hitting the malls every weekend, I would just wander around my neighborhood and talk to locals. Hearing their frank stories of economic struggles, triumphs, and the thoughtfulness that imbued even non-essential purchases made me take a hard look at my own consumption.
Russell found that he changed his spending habits as well after getting married and noticing how his new family treated money. “From what I’ve seen, Chinese people are good savers,” he says. (Data from the World Bank in 2013 found China’s gross savings rate was a 49.87 share of their GDP.) “They make extravagant expenditures, but it is usually from a cash source that has been saved by the family as a wider unit, rather than spending on credit cards. I am so much more careful with money now.”
The poverty line
It’s not all savings accounts and splurges, though. Many Chinese citizens, especially those in rural areas, still reckon with extreme poverty that forces painful choices.
As part of his second-term campaign promises, President Xi Jinping vowed to lift 43 million people out of extreme poverty in just three years. Part of the campaign involves relocating millions of rural dwellers into urban areas where they can—in theory—find better paying work and access to modern conveniences. But already in China, it isn’t uncommon for rural workers to move to cities in search of economic opportunities, often leaving family members, like the taxi driver’s wife, in their hometown and wiring them money regularly.
Take my son’s nanny in Shenzen for example. She was a migrant worker who left her family in northern China so that she could work a 24-hour train ride away in South China. She worked 12-hour days, going from my house to a slew of other part-time gigs on evenings and weekends.
As we grew closer, I learned about her three children back home, whom her mother helped raise. She told me she sent most of her money to take care of the children and her aging parents. Whenever there was an extended holiday, she worked extra hard to save up so she could visit them.
She was never a frivolous woman, cycling through the same few outfits during the years I knew her. But once, she took my son out for a shopping trip and came home delighted to show me the toys she was able to afford and send to her children for their birthdays.
Less regulations, mo’ problems
For consumers on all ends of the spectrum, China's rapid economic and technologic rise has created a new problem: Regulations have been slow to develop, and scams abound across the retail industry.
The problem is particularly bad online. The Chinese have increasingly embraced online shopping, advertising through social media, and digital forms of payment. WeChat, a social media and messaging app, had nearly 1 billion users in 2017 with 31 percent online shopping through the app. Retailers market on the app, and users can pay using WeChat Wallet, much like Apple Pay. Online marketplaces like Taobao and its spinoff Tmall.com (both a cross between eBay and Amazon) have become extremely popular among young adults.
And you can bet as a practically born-on-the-internet American I was all about that online shopping. I used to spend hours comparing prices on Taobao. You’d think with all that obsessive searching, I’d find quality items I loved, but that was rarely the case. Many items literally fell apart in my hands as soon as they were delivered, clothing would unravel after the first wash, and once I bought a piece of luggage only to have the wheels fall off after my first flight.
It wasn’t just me. When I recounted my online shopping woes to Chinese acquaintances, they told me they found it hard to trust online vendors since counterfeit items abound in China. Instead, they preferred to shop in person so they could carefully inspect goods. One friend even said I should ask her for help the next time I wanted to buy something online because she was afraid I would get scammed again.
Over time I learned to scrutinize each and every item I purchased (including grocery staples, there are counterfeits for those, too). And while both Taobao and Tmall.com have stepped up security measures—including real-time chat between vendors and shoppers and escrow-based payment options so items can be tested in-person before paying in full—shoppers who do fall victim to scams are largely out of luck. While the government claims to monitor these companies, China lacks a third-party system like the Better Business Bureau to help consumers get their money back.
China still has a long way to go to meet the economic demands of the new generation of consumers, and to ensure that its rural poor and urban-dwelling migrant workers have a shot at prosperity, too. But to me, the country’s unique, considerate appreciation of shopping is a fascinating byproduct of its economic 180. Perhaps as China becomes more like the rest of the world economically speaking, we might learn something from them about our own purchasing power, too.