Rising power of China's spendthrift generation
By Olivia Chung
HONG KONG - After working as a migrant worker at a Hong Kong company, which
still owes her at least a month's salary of HK$5,000 (US$641) after closing
down, May Li returned to her home town of Guangzhou, capital of the southern
Chinese province of Guangdong, and soon found a similar job there selling and
promoting mobile-phone services.
Though she is still in debt due to credit cards, May, 22, said she isn't
worried about her financial future. May, who is a trainee,
owes 1,500 yuan (US$194) in credit-card debts. But she said she believes she
could eventually earn as much as 3,000 yuan a month at her new job.
But she said she still spends as much as she earns, saving nothing. "No matter
how much money I earn, it still isn't enough for me to spend," she said with a
laugh.
"I don't have any savings, but I'm not worried because I can earn money in the
future," said May, who said she has "a nice boyfriend" who is helping her pay
off her credit-card debt. "My boyfriend and I had a plan to save half of our
salaries since the beginning of last year, but only he could do it," she said.
May attributed her carefree, spendthrift attitude to her love for "the material
world".
"There are so many things here in Guangzhou for us girls to spend our money on
- karaoke, cosmetics, shoes, bags and clothing for different seasons," she
said. "And the biggest expenses for my boyfriend and me were for traveling
around Guangdong province - we both decided on the destinations, but he paid
for it all."
How much does she contribute to her family? "It has always been 500 yuan a
month when I have a job," said May, whose parents are still working.
Like Madonna's "material girl, living in a material world", May and her friends
are typical of the late-1970s-1980s generation, one that is considered a major
consumer force in China. They call themselves the "moonlight" (or yue gang)
generation because their salaries are typically gone within a month's lunar
cycle.
Another happy yue gang is Martha, also born in the 1980s, who owes
10,000 yuan in credit-card debts, though she earns just 4,000 yuan a month as a
public relations officer for a Guangzhou cosmetics company.
"I spend a lot on clothes, handbags and cosmetics, so I have to work very
hard," said Martha, who has three credit cards. She said that as long as she is
employed, she has no worries about the future.
The two are typical affluent products of China's one-child policy, often
referred to as the "little emperors", and in a recent study conducted by the
accounting firm Ernst & Young, as Chinese women and as children of the
1980s, they are a combination of two major consumer forces in mainland China.
The report attributed the increasing consumption power of Chinese women to a
more open social environment that allows them to pursue careers as single
women, with many commercial opportunities open to them.
It is estimated that 88% of urban Chinese women in cities will continue to work
to earn their own money, even if their husbands or families could financially
support them as housewives. Additionally, as women are contributing more money
to their households, they are also assuming more power when it comes to
economic decisions.
"The improved economy and one-child policy mean that the post-1980 generation
are on the receiving end of six expendable pockets - two parents and four
grandparents. They are able to freely spend whatever they make because there is
the possibility that they can always ask for help from their parents and
grandparents. A number of these 'little emperors' have no qualms about freely
spending their wages on purchases, giving little thought to building their
savings as their parents and grandparents have fastidiously done," it said.
The report said the potential spending power of Chinese women could be enormous
in the next decade. According to estimates from MasterCard International, the
total purchasing power of young Chinese women living on their own or in married
households with no children is likely to rise from US$180 billion in 2005 to
$260 billion in 2015.
It's not just the females. Zhou Yu is a male 28-year-old sales representative
for a wedding service company in Guangzhou who said that sometimes he spends
about 100 yuan for a lunch at a high-end restaurant, but "it's all about work".
"I am working in the services sector, so I like to know what service
establishments such as high-end restaurants offer and then see what our company
can do to serve our customers better," said Zhou, who earns about 3,000 yuan a
month. "Besides, as a frontline worker, I need to spend money on clothes and
shoes."
Zhou said he has saved some money, but gives most of his savings to his
girlfriend to spend because she buys more things than him.
"The main reason that I can spend all my salary is that I live with my parents
and I don't need to pay rent or a mortgage," he said.
Zhou said he has only one credit card with a credit limit of 2,000 yuan, which
is good for him as the low limit helps him control his spending.
China's retail sector is expected to continue its expansion to reach a new high
of 8.7 trillion yuan at the end of this year, representing a growth rate of
14-15% on last year's figures. Domestic economic development accounted for 36%
of the country's gross domestic product in 2006. This figure was quite low
compared with more advanced countries, which suggests there is still huge room
for growth.
To pry open more young wallets, many companies, notably in the luxury fashion,
wedding service and cosmetics industries, are targeting young consumers by
continually launching new products, stylish packaging and low-priced
"package"services.
Fang Xiangqian, chairman of Guangzhou Friendship Store, said the luxury
consumer sector has increased notably in two years and accounts for 13% of
China's total population, with 10 million to 13 million people defined as
"active luxury consumers".
"Although those born in the '80s aren't yet the main luxury-market consumers,
given their attitudes about consumption and their higher appetite for new
things, their spending power cannot be underestimated," he said.
Olivia Chung is a senior Asia Times Online reporter.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
