You Say Capitalism, I Say Communism

In front to The Pantry with two Western entrepreneurs in China, Christine Asuncion (Spread the Bagel), and Lexie Morris (Lollipop Bakery).

In front of The Pantry with two Western entrepreneurs in China, Christine Asuncion (Spread the Bagel), and Lexie Morris (Lollipop Bakery).

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.

I don't make this stuff up.  They are "weeding" the lawn.

I don’t make this stuff up. They are “weeding” the lawn.

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.

Arthur Wang of Delviel welcoming Shanghai Guy Tai's for a factory tour.

Arthur Wang of Delviel welcoming Shanghai Guy Tai’s before a factory tour.

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.

A production line at Delviel factory.

A production line at Delviel factory.

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.

The factory work is manual, and very repetitive.

The factory work is manual, and very repetitive.

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.

Jen Iannuzzi, better known in Shanghai as The Hummus Lady.

Jen Iannuzzi, better known in Shanghai as The Hummus Lady.

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).

Christine and Lexie and their signature bags with logos.

Christine and Lexie and their signature bags with logos.

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.

Bakers at work at Spread The Bagel.

Bakers at work at Spread The Bagel.

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.

And finally, and completely unrelated to this post, Cassidy on her 7th grade field trip, on the Great Wall of China.

And finally, and completely unrelated to this post, Cassidy on her 7th grade field trip, on the Great Wall of China.

Advertisements

8 thoughts on “You Say Capitalism, I Say Communism

  1. Howard,
    Great post! Compelling reading. I, too, found Chinese “industriousness” fascinating during my time there. Your concern over whether the governmental apparatus at play: communism versus capitalism, or a combination seems to me to not really get to the heart of the matter, though. Isn’t it merely semantics? Like many Americans, there’s a bit of timidity about seeing value in a communist (or even socialist) economic system. We don’t need to examine this suspicion since we have all been a bit indoctrinated to fear these terms, but collectivism, after all, is a more inclusive, community-minded notion at its core, wouldn’t you say? Maybe the work ethic you see stems from that and isn’t capitalistic at all…
    As for deconstructing capitalism, let’s go – it’s fair game. You say that the economic system/status quo there in China has moved millions into the middle class; I say the economic system/status quo here has moved millions OUT of the middle class. (The next time one of my students comments that one need not spend time in another country to understand and value our own, I will point them to your blog!)
    Relatively speaking, there are certainly drawbacks to either system – and in China, the powers-that-be have tools to keep the populace from learning of these negatives. Touché if you said that the U.S., as well, now spies on its citizens and censors information.

    Who, in China, gets to weigh in on decisions like these?
    http://www.science20.com/science_20/chinas_synthetic_gas_plants_will_produce_7x_more_emissions_natural_gas-121109

    I tried to make the case not too long ago that it’s really a capitalistic economic system now in China, in all its insidiousness, and yet a controlling, censorious, police state socially. Why are there so many newly wealthy —sickeningly wealthy—from the ruling class? I guess they are mimicking aspects of our economic system . . .
    Absolutely no one I encountered there, I repeat: not one person, had a critical thing to say about the government. Happiness seemed to reign. Here, it’s quite the opposite. Reading articles after returning to the states, reassured me that there certainly are dissenters and activists there, and the government’s punitive response to their efforts was also evident. It’s similar to our own government’s crackdown on “whistleblowers.”

    I noted too, your comment that “with no labor unions,” the company owners did the right thing, and refrained from technological upgrades so as to hire more workers. Hmmmmm. I wonder about the ethical imperative in that decision. I’d wager it was more of a capitalistic, profit-driven choice somehow – or were they speaking to a group of westerners?

    But, I’m cynical and pessimistic I suppose, and this blog response has gone on waaaaaaayyyy to long. Thanks for the post! I’ll be mulling it over for some time, I can assure you.

  2. Howard – enjoying reading your blog. We are Michiganders who will make the move to Shanghai soon as well with 2 children. Wondering if you would be open to some questions?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s