The Challenging Chinese Consumer Market

May 16, 2011

When foreign businesses such as Home Depot or Wal-Mart open for business in China, knowing the market and consumer is a good idea.

Most Chinese consumers have a different perspective than most Western shoppers when it comes to spending money. The average Chinese consumer born before 1980 prefers to pay cash and buy the best quality for the lowest price.

There’s also a difference in spending habits between younger Chinese born after 1980. Evidence suggests that younger Chinese have caught the credit card virus and are running up debt similar to the average American consumer.

Bob Schmitz writing for NPR’s Marketplace on Friday, April 8, 2011 says, “Home Depot not a hit in China.”

Schmitz talks to Raymond Chou, the CEO of Home Depot operations in China. When asked about closing five stores, Chou indicated this is not a sign of failure and said, “(Home Depot) has closed stores to focus on China’s lesser-known cities where much of the country’s real estate development is booming.”

One criticism Schmitz writes of is the fact that many of Home Depot’s products are made in China and may be bought for less from Chinese merchants.

However, one Chinese contractor says he shops at Home Depot because “It’s easy to exchange and return goods… and (he) knows the materials (at Home Depot) are safe and not fake.”

Wal-Mart critics may rejoice. According to NPR, Wal-Mart’s goals in China are to purchase a chain of retail stores there.

If this scheme will succeed remains to be seen. Wal-Mart has faced slowing business in the United States, is struggling in Japan and failed in Germany and South Korea.

Wal-Mart’s biggest challenge is to overcome its habit of fighting unions and paying low wages, which forces many workers to rely on local welfare and public-health programs. This isn’t welcome in some markets and is the reason why Wal-Mart left Germany.

For the same reasons, Wal-Mart, which is allergic to unions and paying workers a living wage, is facing a Chinese government that is strengthening worker protections and rights to organize/join labor unions.

Last summer, Wal-Mart was forced to allow its Chinese workers to join a union for the first time.

To understand the Walton family, Bizmarts.com reported, “As Sam Walton explained in his 1992 autobiography, Made in America, he didn’t believe in giving ‘any undeserving stranger a free ride’. Nor did he believe in being generous with company profits.”

Forbes reported that the Walton family was worth about 90 billion dollars or 18 billion each.

Discover how China is Holding a Vital Key to Humanity’s Future

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Lloyd Lofthouse is the award-winning author of the concubine saga, My Splendid Concubine & Our Hart. When you love a Chinese woman, you marry her family and culture too.

To subscribe to iLook China, look for the “Subscribe” button at the top of the screen in the menu bar, click it then follow directions.


Making China the Goat Again

June 29, 2010

China’s currency policies continue to ruffle feathers.  Robert E. Scott writes in the Huffington Post that US lawmakers must force China to raise the value of the yuan by 40% so jobs will materialize in America.  He claims that China is responsible for 1 million displaced jobs and must be punished economically with high tariffs if they don’t comply.

What he doesn’t mention are the jobs lost to the subprime mortgage crises, which almost sunk GM and Chrysler along with plummeting real estate prices, a storm of bankruptcies and endless foreclosures—not counting the trillions added to the national debt to bail out banks. 

He doesn’t mention that more than 10 million US jobs go to illegal immigrants who flood across America’s southern border to work for low wages.  He doesn’t mention NAFTA, which took another three million US jobs to Mexico and Canada.

He also doesn’t mention the 20 to 40 million Chinese who lost their jobs and tens of thousands of Chinese factories that closed due to the same subprime mortgage crises that was caused by US Wall Street banking greed and lax government oversight when G. W. Bush was president.

My question is, “Mr. Scott, why are you making China the lone goat for America’s debt crises and job losses?” 

Why not mention all the other low wage countries that manufacture products sold in the US—the list is long. I bought something made in Haiti recently, and it wasn’t art. Does that mean someone in Haiti took a job from someone in the US?

Why not ask Americans to stop buying iPods, iPads, Macintosh, Dell, and HP since most of these products are assembled or manufactured in China or other low wage countries.

Why not ask Americans to stop buying from the likes of Wal-Mart or mention how many Americans have jobs because of high-end American products that Chinese consumers buy.

See A Stable Basket of Cash

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Lloyd Lofthouse,
Award winning author of the concubine saga, My Splendid Concubine & Our Hart. When you love a Chinese woman, you marry her family and culture too. 

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Printing Books in China

March 4, 2010

I read a post about printing books in China at Chicken Scratchings, and this was my response.

If American’s stopped buying products made in China, Americans at home would lose jobs.  Since Wal-Mart has more than ninety percent of their products manufactured in China, Wal-Mart might go out of business or shrink (which might be a good thing).  But many low wage people that work for Wal-Mart in the United States would be unemployed like American autoworkers.

Most Chinese products are manufactured for American companies.  Some of Apple’s products are manufactured outside the country like iPods in China. Try to buy a car, any car, that’s 100% manufactured in the United States.  Does it matter where the jobs go?  They are still gone. People in India, Pakistan, Indonesia, Nigeria, etc. are manufacturing goods that are sold in the United States. China isn’t the only country that does this.  Yet China seems to get all the blame.

Many products may be built in other countries but an American puts them on the shelf, sells them and gets paid for it.

To understand the situation better, I recommend reading China’s Cheap Price Structure at  http://wp.me/pN4pY-2R
and/or Doing buisiness in China at  http://wp.me/pN4pY-2Y


Where did all that Pollution Come from that Plagues China?

February 7, 2010

Before criticizing China for polluting the environment, learn about the history that caused today’s problems first. The First Industrial Revolution took place in England after James Watt developed the steam engine in the late 18th century. Coal and burning wood played an important part in this process. The result, the beginning of serious air and water pollution.

The second Industrial Revolution (1820-1870) was significant to the economic development of the United States, and this process increased between 1870 and 1914 leading up to World War I.

Pollution from industry increased to epidemic proportions after World War II in 1945, because the type of pollution changed significantly. Industries in America and Europe began manufacturing and using synthetic materials such as plastics, polychlorinated biphenyls (PCBs), and inorganic pesticides like dichlorodiphenyl trichloroethane (DDT). These materials are not only toxic, they also accumulate in the environment—they are not biodegradable. This brought on increased rates of cancers, physical birth defects, and mental retardation, among other health challenges.

Due to an increase in world trade after World War II and moving a significant percentage of the world’s manufacturing to Japan, then to China after Mao died, the pollution created by using these synthetic materials increased and with it pollution moved to a global scale. Most of the products that are manufactured in China are sold by multinational corporations like Wal-Mart where 90% of what they sell in America is made in China.  If you shop at places like Wal-Mart, you are partly responsible for the pollution in China. When you hear criticisms blaming China for polluting the environment, point a finger at yourself as one of the causes. For that reason, I do not shop at Wal-Mart.

Another factor is that there is a lot of pressure from the people of China on their government to improve the standard of living for 1.3 billion people. Only one other country on the planet at this time has the same challenge and that is India.

A city street near Shanghai, China

The changes taking place in China and India today parallel the changes that already took place in America, Britain and Europe more than a century earlier. In the 1960s, about sixty percent of Chinese workers were employed in agriculture. That figure remained more or less the same throughout the 1960s into the early 1990s. In the 1990s, the labor force employed in agriculture in China had fallen to about thirty percent, and by 2000 still further.

By comparison, in 1870, a hundred-and-twenty years before 1990, fifty-three percent of workers in America were in agriculture. Today, that number makes up 3% of the workforce. The rest live in towns and cities with a middle-class consumer lifestyle that many in the world want and that is the cause of much of the pollution in the world today.

What is China doing about its pollution problems? Next, iLook China will focus on answers to this question at  China Going Green

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Lloyd Lofthouse is the award-winning author of the concubine saga, My Splendid Concubine & Our Hart. When you love a Chinese woman, you marry her family and culture too. 

To subscribe to iLook China, look for the “Subscribe” button at the top of the screen in the menu bar, click on it then follow directions.


Doing Business in China

February 7, 2010

I’ve talked to an American doing business in China who was frustrated with the process while another American like Bob Grant wrote I Like the Chinese People.

 After all, Bill Gates Went to China. It seems many American businessmen are getting along better with the Chinese than the Western media and politicians. When’s the last time you heard something nice about China from the Western media or an American politician?  For some reason, China has become a scapegoat turning the attention of the American people away from the problems we have in the United States.

 In the meantime, General Motors and Ford are doing great in China while they are struggling in the debt ridden United States. The Chinese love American cars. The Chinese also seem to have a passion for McDonald’s, Pizza Hut, KFC and Starbucks.

Starbucks in China

 Wal-Mart is in China too.

 If America wants to get along better with the Chinese government, we should turn businessmen like Bill Gates or Bob Grant into diplomats.

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Lloyd Lofthouse is the award-winning author of the concubine saga, My Splendid Concubine & Our Hart. When you love a Chinese woman, you marry her family and culture too. 

If you want to subscribe to iLook China, there is a “Subscribe” button at the top of the screen in the menu bar.