Save Our World, Create Chinese Consumer Culture

So the post title is a bit hyperbolic, but not much. If global economic imbalances imperil the existence of the contemporary trade and globalization, then job#1 is alleviating them. In case you missed it, the New York Times Magazine had a very interesting article over the weekend on the challenges of getting China to move towards a consumer culture. While the US has swung too far in that direction, China is arguably at the opposite extreme. Both must change.

There are certainly many examples of PRC noveau riche splurging (see the accompanying photo essay), but that's not what will get consumption up in China but Jiang average opening up his or her wallet. I have actually written an academic piece that makes similar points--it's in China's best interest to become less manufacturing intensive on environmental grounds, revaluation of the renminbi will encourage domestic consumption by increasing local purchasing power, etc.--but I'll save that for a later day. In the meantime, the NYT article gets the general outlines of this story right, although I have more to say about the marketing aspects of creating Chinese consumer culture:

In China’s halting efforts to build a new economy today, there is an intriguing parallel to the United States: Both the world’s largest economy and its latest challenger need to remake themselves. As Guo bluntly told me, “You are facing transformation, too.” The United States needs to shift away from debt-financed consumption with little long-term benefit and toward investments that can create good-paying jobs, like education, infrastructure, energy and scientific research. China needs to invest less and consume more — to keep growing rapidly and, in the process, to stimulate economic growth around the world. In both countries, significant changes are necessary to create more sustainable growth. And in both countries, they inspire fierce internal opposition.

We tend to think of the United States and China as rivals, and they will continue to compete in coming years, over which will build the industries of the future and which will be the dominant power in Asia and the world. But our problems are also linked, just as the Chinese export boom and the American consumption boom depended on each other and, together, helped create the financial crisis. The worst outcome now, for both countries, might well be economic stagnation in China. That would slow U.S. growth and could lead to political chaos in China. The best outcome would be for both countries to reshape their economies gradually, benefiting both. In neither country will it be easy.

Also see another post that questions China's inability to create globally recognized brands, hindering its companies' abilities to move up the value chain.