Within walking distance of the Beijing community where I live is a strip of road brightly lined with seasonal flowers and plants from late March to October – the outdoor plant market. I have purchased my garden supplies from this market for two years and over time have developed a friendship with one that particular couple. Their story is not unusual in present-day China. But it is one many people, including those who frequent the market as much as I do, may not be awarem of. Foreign news coverage of China tends to focus on trade disputes, increased attempts by the Chinese government to exert influence in global financial and policy-making bodies, and human rights. Much less is published about the everyday life and economic opportunities of “ordinary” Chinese who will eventually shape the country’s and the world’s future. This article focuses on one particular family. But the experiences of my friends (whom I will refer to as the ‘Plant Lady’ and the ‘Plant Lady’s Husband’) repeat themselves throughout China. They each have spent the majority of their lives away from their hometown. They have arrived where they are now through help from family. The economics of their business are common to China’s vast small-enterprise economy. And their outlook on life and their financial situation is similar to that of many Chinese I know.
A Life Away from Home: Family Benefits and Burdens
The Plant Lady left her home in southern China at sixteen to wash dishes at a restaurant in the city. From there, she made it to one of the many factories in Guangzhou where she met her husband, also from the same county, and also working in a factory. From the ties formed through this marriage, she arrived in the neighborhood where I now live.
There are eight independent plant sellers in this market: three are siblings, and all are from the same county in China. The Plant Lady’s Husband is one of the siblings. Each sibling has gotten established in the market with the help of a family member. The eldest brother (Dage) was the first to start selling, taking over the business of the older brother of his wife, who was successful enough to move up to wholesale plant selling. In March of 2007, Dage brought the Plant Lady’s Husband with him to help. Within one month, the Plant Lady’s Husband called home to his wife asking whether she thought they could sell plants. A few weeks later, the Plant Lady arrived carrying her three-and-one-half-month-old daughter. The elder sister (Dajie) is the most recent arrival. She took a loan from Dage to help start her business last year.
In China, many small economies develop around family units or people from the same hometown. One day I was sitting with the Plant Lady when a couple drove by in their three-wheel motorized cart overloaded with gardening tools. The Plant Lady told me that they were very successful because they had a brother who renovated houses and then introduced their gardening services to his clients. The Plant Lady’s Husband often provides free labor to Dage, and the Plant Lady this year brought her younger brother with her because he was too “slow” and “lazy” to hold a job back home.
People from every country feel a certain affinity to those from the same area where they grew up. But, in China, these geographic antecedents carry much more weight. One of the first questions Chinese may ask each other is, “What place are you from?” This is not a question of simple curiosity. In China, cities within provinces, not to mention separate provinces, can have their own language (some refer to the differences in spoken Chinese as dialects, but, in some cases, local variations in pronunciations and word use are so great that they may be better classified as independent languages). I speak only Mandarin, the official spoken Chinese of mainland China, and the Plant Lady has to remind her daughter not to use her local language so that I can understand her. More than this, geographic origin carries with it a strong preconception of the type of person you are – whether you have a good sense of humor, whether you are trustworthy, whether you are a good businessperson, whether you are pretty. And these stereotypes, for lack of a better word, remain lodged in the back of people’s minds despite long business relationships or friendships (and even among my Chinese friends who have spent many years living abroad). A common geographic origin creates an immediate bond and feeling that you know a person and what she is about. At the same time, there is a pressure to help those from your home region who are less fortunate than you. There is one seller in this plant market who comes from the same county as the Plant Lady. She was widowed at a very young age and has never remarried. She cannot do much of the manual labor required in this business, nor does she have a car with which to make deliveries or purchase stock. Because of this, the other sellers in the market help her out. Her geographic ties allowed her to begin selling, knowing she would be backed by some measure of support. I have seen the effects of this dynamic in clothing markets where the vendors are all from the same region, and in a supermarket chain where the owner hires her workers only from her home province. I have also personally experienced it in my previous business where we sought workers from the hometown of my partner’s family because their accountability to the small village back home ensured trust and responsibility.
Of course, these familial and geographic ties are not without limits. I don’t think I have ever seen Dage provide free labor to his younger brother, and the Plant Lady eventually sent her younger brother home because he was too slow and lazy even to work for her. This year the Plant Lady has purchased a lawn mower. I asked her why it was not sitting there on her corner so that people would know she could mow their lawns. She patiently explained to me that she keeps it in another place. She worried that if the lawnmower were not obviously being used, other people on the strip would accuse her of wasting it and depriving them of money-making opportunities. They would use it for free and either break it or not return it. This she knows from experience: at the beginning of the season she loaned some tools to a fellow seller and hasn’t seen them since.
The Small Enterprise Economy
The plant corner in my neighborhood is in some ways a microcosm of the market structure that continues to dominate China’s domestic market. In a strip less than a quarter mile long, you have eight entrepreneurs selling the same or slightly varied commodities. This extreme product concentration is not limited to the least expensive items – if you want to purchase fur or leather coats, you go to the street where every shop is selling fur and leather coats; if you want computers, disk drives or memory chips, you go to the four-story building crammed with hundreds of stalls selling computers, disk drives and memory chips. The same with musical instruments, art supplies, lead pipes and plastic. Almost all the people I know who have visited China have asked the same questions I repeatedly ask myself: Why do so many individual sellers of essentially the same commodity choose to locate right next to their competitor, and how do they survive?
I am not an economist and this is not intended to be an economic article. However, I understand from friends who are professional economists that agglomeration and clusters historically occur in certain sectors in every country. Various theories have been proposed to explain this tendency, including facilitation of knowledge transfer, concentration of appropriately educated workforce, and savings from proximity to suppliers. To some extent, these theories apply in China – for instance, the higher-technology consumer goods center is located near the high-tech business and university area of the city. But even my economist friends who are old China hands tell me that current research does not adequately address the peculiarity in China of the extreme physical concentration of very small individual enterprises operated by people with the same geographic origins. From what I learned and observed through my friendship with the Plant Lady and her husband, I suggest a few additional explanations specific to China.
Word of mouth remains an important communication form. A large portion of the population still lives in small villages and towns, and this population generally has low levels of education and limited means of learning what is happening on the “outside.” Concurrently, economic conditions in these areas may require that people leave in order to support themselves and their families. It is common, therefore, for people to learn of new opportunities when one person leaves and finds success, just as happened in the plant market in my neighborhood. For migrants with low levels of education (the Plant Lady finished only six years of school) and limited job prospects, it is relatively easy to step into an existing market to which they have some exposure and basic knowledge, and in which they have seen others already succeed. (Another example of word-of-mouth communication comes from my questions to the Plant Lady about where she keeps her money. She tells me that from listening to other people, she changed from hiding her money under her pillow to putting it in a bank account.)
A logical next question is why the newcomers chose to open their own small business, rather than partner with an existing business? The experiences of the Plant Lady and her husband suggest potential reasons. They spent approximately ten years working in Guangzhou, each arriving there following others from their home county. During that time, in their respective factories, each progressed quickly from ordinary factory worker to management and earned comparatively good compensation of approximately US$400 a month. Housing and food was provided, and they were able to save several thousand dollars. The factory owners liked both the Plant Lady and her husband and probably each was on the way to even more responsible and higher-paying positions. Why, then, I have asked the Plant Lady, did they leave these well-paying jobs for a business with uncertain, and potentially much lower, earning potential? She provides some concrete reasons: she and her husband saw each other only once a week; the housing was one dorm room where everyone slept on bunk beds. But the reason that seems to have made the most difference was their feeling that it was better to be their own bosses. This is a sentiment that I have heard expressed in almost every conversation I have had with Chinese people in China regardless of economic, educational, or geographic background, and regardless of age. Obviously, this is not possible for every person, but, of the people I know, a disproportionately large number either own their own business, however small, or have tried it even if they failed and had to go back to working for someone else.
The dream of being your own boss is common to many cultures. However, in China, people may be more inclined to bear the risks of entrepreneurship for more practical reasons. Although the situation is improving, workers still lack basic rights. There is no minimum, much less living, wage, and employers take full advantage by paying their workers as little as possible. An owner can be a millionaire many times over, while his workers are each taking home US$5 a day, or, at times, nothing if the owner refuses to pay. Even in larger businesses, owners exercise significant control over their workers – having full access to all e-mail and other correspondence, requiring overtime work, and managing almost every aspect of a worker’s day. These realities create a level of distrust of owners and bosses and many Chinese seem to prefer to shoulder the risks that come with starting a business just to maintain control over this part of their lives.
Markets for plants and other things tend to cater to people in the immediate area. One reason is the sheer concentration of people. The plant market near my neighborhood services several complexes, but just a mile down the road is another plant market whose customers come from a different set of complexes. There are enough people living in these complexes and in the surrounding neighborhoods to support scores of sellers within a two-mile-square area. Working together with the size of the market is the difficulty of transportation in China. Despite the increase in car ownership, the majority of the population still depends on public transportation. And while China’s stimulus package is helping to increase the availability of public transportation, the subways and buses remain unbearably crowded. There is a popular, rather lewd, joke in China describing a woman who gets pregnant just hopping on the bus. Even if you do have a car, the traffic conditions significantly dampen the appeal of traveling around comparison “shopping.” With the unease of transportation, consumers welcome the ability to travel to just one location to purchase goods, especially combined with one final characteristic of the Chinese consumer, an obsession with bargaining.
That Chinese love to bargain is no revelation to anyone who has been to China for even one day. Certainly, one does not generally negotiate the prices at stores such as Walmart or the Chinese grocery chain Jingkelong. However, the majority of consumer purchases still occur at small businesses, and the asking prices are very rarely the price that a buyer expects to pay. “Mainstream” stores have adopted pricing practices to reflect this mentality – while there may be a price sticker, there is almost always a matching sign posting an automatic “discount.” This long-standing and pervasive tradition of bargaining also means that one lives in constant dread of being cheated. Purchasing items from a place like the plant market in my neighborhood helps alleviate this fear. One is able to obtain eight price quotes in a matter of minutes. Because of the degree of competition among suppliers, the buyer has a better feeling that she is paying a fair price. The constant price negotiation also means that trust becomes very important. The Plant Lady has many long-time customers like me, and I’d bet that they come back to her for the same reasons I do. I know that if I’m a regular customer she won’t cheat me. I also know that if she doesn’t have something I want, she will check across the street, and if they have it, and since they know her and know that I am her good customer, they also will not cheat me. “Brand” loyalty, in a sense, may be more influential in China than it is elsewhere. In a country where there is no Consumer Reports, one good experience can mean a lifetime of continued purchases.
My layman’s observations suggest how one tiny corner economy in China arose and perseveres: one person left; stories back home brought relatives and fellow villagers; these newcomers were limited in their opportunities but came with a strong desire to operate their own businesses; because of the limitations, it was easiest and most expedient to enter into an existing market; the population is great enough to support this market; and transportation realties and consumer buying traditions enable this market to survive. It’s a situation that repeats itself throughout the city where I live and across the entire country.
Attitudes on Life
My friendship with the Plant Lady highlights some common characteristics among the Chinese people I have met – in all segments of society: self-sufficiency, generosity, humor, and optimism. In the Plant Lady’s hometown, they live in the family house. It has no running water and no gas or electric stove. Cooking and heating primarily come from whatever throw-off you can find – corn husks, plant stalks, trash. In the city where I live, the Plant Lady and her husband rent a 40-square-meter room for approximately US$11 per month. But it has running water and a gas stove. I live in a townhouse that I rent for US$2,000 a month, yet I have had many conversations with the Plant Lady and her husband in which she chastises me for helping them out too much as I live a much harder life because I am on my own. To help me out, this woman gives me fresh vegetables and sells me plants practically at cost.
China remains a country largely of very frugal people, trying their hardest, and quite often succeeding, their hardest to survive and improve their own circumstances and those of their children. In her mind, with each move, the Plant Lady has made her life better. Although the money was more certain in Guangzhou, now she and her husband spend their days working together, and they can control how much and how hard to work to earn what they can. The first year she started selling plants, she jokes, they could only eat mantou (steamed bread); this year, they can eat wheat pancakes (the difference in cost being about US$0.30). Last year they used part of their savings to purchase a van (at a price less than the cost of my mountain bike, I have recently discovered) – a necessity for purchasing stock and making deliveries. This year they purchased the lawn mower. She has enough money to send her child to a private school (an institution where 50-60 children attend class together, and at night sleep in one big room watched over by one teacher, at an annual cost of approximately US$300). In the summer, her child comes to visit and enjoy new experiences. Just recently the Plant Lady announced to me that she has a new plan. Her family was outgrowing the small family house, and since the economic crisis has decreased prices, during the winter when she’s back in her hometown she may take her savings and borrow from her relatives and build her own house – with a living room to entertain guests (how can friends visit you if they have to sit on your bed?) and a kitchen and a separate room for her daughter.
The media often report on the size of China’s migrant working population. By some statistics, migrants can comprise up to 50 percent of the population of China’s largest cities. News reports emphasize the poor conditions and lack of opportunities in China’s interior with the implication that migrants have no choice other than to leave their hometowns, and that they do so reluctantly. Without doubt, the economic gap between the cities and the countryside forces people to the cities for survival. Migrant workers are easy prey for unscrupulous employers who know that without proper working permits their workers have little recourse if, for instance, they are not paid their wages. Housing conditions can be substandard and families are split apart. But whether the people who leave their hometowns are as disgruntled as often portrayed is not so clear. At least, I don’t believe this is the case with the Plant Lady. (A perhaps important note here is that many educated middle- to upper-middle-class Chinese are also migrant workers and have moved to the cities from small hometowns to take advantage of greater opportunity. Very often, the families are split geographically, with the mother and father working in different cities, and the child often living in a third.)
Neither the Plant Lady or her husband, nor any of the other sellers, is getting rich. But each of them is making enough to pay their living expenses and save a little money; at least in the case of the Plant Lady and her husband, doing better than their parents, and, hopefully, providing better opportunities for their children. I asked the Plant Lady whether she wants her daughter to go to college. Of course, she says, but very few people from our town go to college; it all depends on whether she can score well enough on the entrance tests. But she has a precedent – the eldest son of her brother-in-law is in his last year of university. I asked the Plant Lady whether she would be back next year to sell plants. She says they would see: so long as the land was still empty and hadn’t been taken for some other use, she would be back. If it was taken, they would look for another location. If there was no other location, they would find something else to do. That’s the only thing you can do, she says.