6/25/2004

Chinese be Shoppin'

“Chinese be Shoppin’”

“http://www.economist.com/printedition/PrinterFriendly.cfm?Story_ID=2771531”, an article from The Economist Newspaper and The Economist Group, http://www.economist.com/printedition/PrinterFriendly.cfm?Story_ID=2771531
is an interesting article about the Chinese people’s love for shopping. The amount of Chinese people spending their time shopping continues to grow. According to Tyler Cowen, a Marginal Revolution writer, Chinese mainlanders spent more money per person shopping this last holiday in Hong Kong than all tourists combined. The purchasing of luxury items by Chinese people is also on the rise.

In microeconomics we learned that as an individual’s income increases, their purchasing of luxury items increases whereas their purchasing of inferior goods decreases. Since Chinese people are purchasing more luxury items, is it reasonable to assume that income in China is increasing?

I am inclined to believe that the Chinese people are not necessarily becoming more affluent. Alternatively, they are spending less and less money in other arenas of their lives in order to afford luxury items. This point is demonstrated by a statement by Christopher Zanardi-Landi, a luxury-firm general manager in China for Louis Vuitton. "The Chinese go to Paris, stay at two- star hotels, eat cheap Chinese food and spend all their time shopping,” This statement shows that some Chinese give up eating spendy food and staying in higher priced accommodations in order to afford luxury items.

2 comments:

Falcon said...

We could say that because Chinese people spend more money buying luxury items, income in China is increasing because some companies of producing luxury items today invest a lot in China, which means they can get a lot of profit because of the increase of their income. I have heard many mainlanders like to go shopping in Hong Kong. However, I don't think they are purchasing what they really need. They just want to get satisfied. This is related to utility. More and more untis of utility will be needed in order to make them satisfied, as their income increases. So they will spend more time on shopping to get high units of utility.

C-Dizzle said...

Isn’t it also true that the Chinese market in general is rising at a fast pace compared to many other world markets? If the economy is growing, that means there’s extra money in Chinese pockets and plenty more “stuff” to buy up.

Near the end of the 20th century, many Chinese people began moving out of the ‘no free trade sectors’ of the country. As the people spread out into the more southern portion of the country, many more job opportunities opened up and the people became involved in the market economy.

The increased availability of jobs greatly increased China’s overall growth rate and I’m assuming making the ‘misery factor’ not so miserable anymore.