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[RealMoney-the Street] China Is a Nation of 1.4 Billion Shopkeepers

 

By  ALEX FREW MCMILLAN

 | AUG 15, 2016 | 3:00 PM EDT

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I just returned from almost three weeks in Papua New Guinea, indulging my passion for scuba diving (40 dives, 36 hours underwater in all!). I found the trip to be fascinating in many ways. Not least was the way the expatriates there view the people of my adoptive home – Hong Kong, and in a broader sense, China. Their view from the end of the earth back to the “Middle Kingdom” ain’t pretty. Of course they’re not alone. And that’s a mistake.

PNG isn’t on the map for 99.5% of the world’s population. With a history of cannibals, tall tales about the “raskol” gangsters in Port Moresby, and stories of theft, rape and murder, it might as well have “Here Be Monsters” stamped on its part of the Pacific. But for divers, it’s on the bucket list, with its pristine reefs, lack of commercial fishing, and marine biodiversity that is second to none.

Although you’ll meet the occasional Hong Konger in PNG, 99.5% of mainland Chinese travelers have yet to discover its substantial charms as well. But my flights on Air Niguini over the country’s volcano-dotted landscape tell another story. There were ranks of engineers fresh off the mines and palm-oil plantations. There were merchants heading back home to stock up. Posters for the Chinese mobile-phone brand Huawei Technologies (SZ:002502) follow you onto and off the plane.

Pop into any supermarket, and you’ll find a counter selling digital cameras, phones and memory cards. There will be a middle-aged Chinese guy sitting on a stool as he supervises the local staff. More often than not, he’s looking at his phone. As in much of Asia, this causes plenty of resentment. Not that he’s looking at his phone. That he’s making so much money.

It’s the same scare story we’ve heard before with the Japanese in the 1980s — they’re buying everything! Korean mom and pop stores were favorite targets in the post-Rodney King riots in Los Angeles. The Somali traders who are brave enough to open stores in townships in my father’s home nation, South Africa, bear the brunt of the looting and mayhem that occasionally ensues when the locals get fed up with foreigners taking their jobs — even though it’s Zimbabweans that they’re thinking about.

Now, the Chinese are too successful for their own good. The Aussie expats were full of stories about how Sydney is becoming a suburb of Shanghai. Even the dive instructors climbed on. The Chinese can’t swim, they spit, they keep to themselves, they treat the New Guineans like a subspecies.

Granted, racism is pretty rampant in China. One Lonely Planet guide quoted a mainlander as saying that “there’s no racism in China, because there aren’t any black people.” Tact sometimes gets lost in translation. Chinese shoppers are so rapacious and bad-mannered that they’re known by some as “locusts” in Hong Kong.

In PNG, I sat back and held my own counsel on the harsh words spoken in between my dives about the Chinese. My wife is Chinese, ethnically, although she’s Hong Kong-born and -bred. But she’s as negative when it comes to mainlanders as their worst offshore critics.

I go back and forth on this. On my return, my wife had just met up for birthday celebrations with a Hong Kong friend who works a lot in Beijing. There are actually a lot of smart Chinese, she told me with a note of surprise in her voice. Building on her own experience trading goods on Taobao, the Alibaba  (BABA) subsidiary that is often dubbed “the eBay of China”, they know how to do tech superbly too.

Sweeping statements about a nation of 1.4 billion cover too much ground. In more reflective moments, the expat Aussies conceded that the Sydney-siders don’t have to sell their homes to visitors with briefcases full of yuan. The PNG locals don’t have to buy those cameras or phones, either. They do so because they’re offered too much for their house, or are asked to pay too little for goods that are actually very good.

I no longer hear complaints about Huawei phones, because they’re getting as good as any smartphone rival out there. Hell, Scarlett Johansson was in those ads. They must be good! And I’m betting that Chery Automobile, China’s best-known car brand, will in the end “pull off a Hyundai,” turning a no-name into an international brand name.

So Asia’s corner shops and electronics booths are often run by the Chinese. Their multinationals are gradually spanning the globe. All power to them. Both individually and as corporations, they’re willing to go to places others won’t go – see PNG. They’re willing to operate in conditions where they’re far from family and friends, and they don’t speak the language, for years at a time. What’s more, they’re darned good at what they do.

Napoleon, allegedly, called Britain a “nation of shopkeepers.” Then he met his Waterloo. International investors must not make the same mistake now. It’s worth seeing past the small-town mentality and looking not at what China and the Chinese are taking away. It’s time to pay attention to what they can do for you.

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