China’s economic performance in the last decade has pretty much kept the rest of the world afloat. Whether through massive purchases of mineral resources (Australia), or sovereign debt (United States), or investment in infrastructure (most of Africa and East Asia), China’s explosive economic growth has helped keep many countries from falling into depression during the great recession. And all of that growth came about through the economic policies of a one-party, communist government.
I know that last sentence makes many Westerners crazy, but that does not make it any less true. In the last 30 years China has risen from being a predominately 3rd world nation to becoming the 2nd largest economy in the world. In those same 30 years, China lifted 650 million of it’s citizens out of poverty and into the middle class. In less than 10 years, China will pass the United States and become the largest economy on the planet. All of that powered by the economic policies of a one-party, communist government.
There are those here in China who say the speed and level of that growth couldn’t happen in a capitalistic democracy because politics would get in the way. Only in a one-party state could the massive societal decisions, such as the movement of large populations from the rural countryside to urban centers, drive the double-digit economic growth China has seen in the last three decades. Personally, I’m a big fan of democracy, with a cautious fondness for capitalism. That said, seeing what China has been able to accomplish economically in recent years has given me a new appreciation for its governance.
In a communist economy, theoretically, there is no unemployment (I’m no economist and am kind of winging it now). Here in China that seems to be the case as even the most menial jobs sometime require 20-30 people to do them. (I have woken up on countless Saturday mornings to find a horde of people in my backyard literally squatting and hand-weeding my lawn.) These jobs tend to be part of the local government, and therefore could be considered state sponsored. I guess that’s good old fashioned communism, making sure everyone is gainfully employed.
Then there is the capitalistic side of the Chinese economy, that at times appears to put our capitalist efforts to shame. Don’t get me wrong, I’m still going to back our style of capitalism and democracy, but the former doesn’t necessarily put me at odds with the Chinese. There is a very strong, capitalistic-like work ethic amongst the people here. The Chinese create businesses, large and small, at a rapid pace and then work their butts off to make them successful. China has not just moved people from poverty to the middle class, it has created a significant class of people who would be considered wealthy by Western standards. Proof of that can be found in the recent U.N. World Tourism Organization announcement that 83 million mainland Chinese spent $102 billion abroad last year, passing Americans and Germans, and making them the biggest tourism spenders in the world.
I recently had the good fortune to visit a company and its production facility, Shanghai Delviel, that makes supplies for several Western cosmetic companies, including Chanel, Lancome, and Avon (shdelviel.com.cn). The company, in my opinion, is a perfect example of Chinese economic communism, and capitalism, at work together. The company owner made a wonderful presentation to the Shanghai Guy Tai’s (guytai.net), highlighting the company’s state-of-the-art manufacturing facility. Even so, he explained, there was more automation that they could add to their production line, but that would lessen the number of factory workers they would need. Management at Shanghai Delviel, which like almost all Chinese companies has no union, had decided not to upgrade some aspects of its production facility in order to hire and employ more workers.
Shanghai Delviel is the world’s leading producer of cosmetic sponge applicators, compact puffs, and pouches (products of which I have absolutely no understanding), and yet they made a corporate decision that allowed them to improve the lives of Chinese people, instead of increasing production capability. From what I could see, the owner of the company and his management team all appeared to be doing just fine economically, so there seemed to be no negative impact to them from their production decision. It seemed to me to be a very Chinese decision, which allowed the company to continue to excel, but at the same time brought needed employment to average Chinese folks.
The tour of the Shanghai Delviel factory was a revelation. Maybe 250 employees, mostly women, in antiseptic, white boiler suits, doing incredibly repetitive manual labor. We were told that those employees were not salaried, but were paid by how much they produced, and were free to take breaks whenever they wanted. Most worked in teams that required continual motion by all members or the line would shut down, ultimately impacting how much they got paid. During our tour, no one stopped working or even looked up, they were so focused on their piece of the production line puzzle.
To me, this was where communism met capitalism, and vice versa. No one was being forced to work, every worker was there by choice. They were most likely there as part of the Chinese government’s efforts to bring more people into Shanghai and other cities from the countryside. And to stay in Shanghai and earn a living, they were working long, hard days doing repetitive manual labor. But everyone, from the company owner down to the guy I saw picking lint out of the factory’s industrial dryers, was earning a living. You say communism, I say capitalism.
The entrepreneurial spirit of this city is not limited to native Shanghainese. I know several Westerners here who have started, and are running, successful businesses. Jen Iannuzzi, who is from Michigan, is known in Shanghai as the Hummus Lady, which is the name of the company she started in October, 2012 (thehummuslady-sh.com). Good quality hummus is almost impossible to find in Shanghai, but Jen’s product is spectacular. My girls consume it like ice cream, so its good news that Jen produces about 200 tubs of fresh, high quality hummus per week, and sells it at great purveyors like The Pantry (see below) and Yasmines Steakhouse and Butcher Shop (yasmines.com.cn).
Another foodie entrepreneur here from the U.S. (by way of San Diego) is Christine Asuncion, who founded Spread The Bagel in 2010 (spreadthebagel.com). Christine bills her company as a “boutique bagelry” and delivers bagels to your front door. We eat lots of bagels in our house, and the Spread The Bagel product is the best we have had in Shanghai. (Our favorite is the whole wheat.) Christine’s bagels are made fresh every day at her professional kitchen, and she sells up to 3,000 each week.
Christine’s bagel kitchen is located inside a food co-op and shop in Puxi called The Pantry (bytheco-op.com). There, she is joined by other food entrepreneurs like Lexie Morris, a London/Hong Kong expat who started the Lollipop Bakery in Beijing in 2009. She opened her newest bakery recently at The Pantry to sell her cupcakes and other baked goodies in Shanghai (lollipopbakery.cn). The Pantry is a great, one-stop shop for delicious artisanal food, and supports a variety of other food entrepreneurs that supply Western-style treats to expats and Chinese foodies alike.
It is go-go time here in China for economic development and entrepreneurship, and the good news is that everyone is participating. Whether that’s thanks to communism or capitalism, I really don’t know, or even care. Either way, it seems like China’s economic development is good for everybody so far, including us expats. Like my friends described above, I have started feeling the tug of capitalism here in Shanghai and have started thinking about my next career move. I’ve started businesses before, and have usually done so by chasing things I’m passionate about. Hmmm….what to do in China that involves beer, wine, music and food. Maybe the Pantry needs a restaurant.