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Living with China’s different speeds

Scott Tong Sep 25, 2007

Living with China’s different speeds

Scott Tong Sep 25, 2007

Kai Ryssdal: Five hundred and sixty-four Chinese companies that were in business yesterday aren’t today. Beijing has revoked their food production licenses. Everything from a rice factory down in the south to an MSG plant up north. Chinese regulators are trying to crack down on the unsafe products that have been making their way to market, both internationally and domestically in China.

As it happens we’ve got our very own consumer research branch over there. Marketplace’s Scott Tong is with us from Shanghai. Hi, Scott.

Scott Tong: Kai, how are you?

Ryssdal: I’m all right. But you, on the other hand, have some stories to tell, I gather, about life in the consumer economy over there.

Tong: Hah, how much time do I have to tell? There’s a sense of either things are going to break down, or they’re not as advertised, or they’re fake. And we just kinda have to contend with these things when we walk out the door in China. In nine months I think we’ve probably had nine kind of housing problems — hinges that are breaking down, things that are supposed to be screwed in tight. And we’ve had probably three or four milk containers go bad and they’re supposed to have five more days left on the expiration date.

Ryssdal: Well, give me your on-the-spot analysis, then, Scott and tell me what you think is wrong over there.

Tong: Well, when I first go to China, this economist, Will Hess, at Global Insight, one of the first things he told me is China is moving at different speeds. I think about Shanghai and, you know, it’s building the tallest building in the world. It’s got these fancy French designer stores on the one hand. On the other hand, figuring out how to transport meat in a truck so it’ll stay cold — how to spot check that, how to regulate that. Now, we have seen this before in history. Americans will recall a book about the meat supply, where there’s dead rats got into the sausages, and meat companies would bribe the government inspectors so that they could take sick cows and slaughter them to put the beef into the beef supply. That was America. Upton Sinclair and “The Jungle.” It was almost exactly 100 years ago when that book came out, led to this public outcry and the FDA being established in America. Well, China is moving along that path. And what is exciting and fascinating about China is, in America it took 100 years to get to where things are today. China’s trying to do the same thing in a generation. Maybe 20 years or less to jump from one of the poorest countries per capita in the world to pretty soon the world’s number three economy. It’s gonna pass Germany in the next few months.

Ryssdal: When you go out, though, Scott, and do your reporting for stories that you bring back to us, do the old hands who are there tell you things are really getting better. I mean, is it really happening or is this just something that the Western world kind of wants to see?

Tong: We talk to a lot of other experts, other foreigners, here. And when we kind of grumble about how our life here doesn’t match our cushy life back in America, they say, “You should have been here five years ago. You should have been here 10 years ago. And think about all the things that we didn’t have in China then as far as choice and product quality. Because there’s now this whole range of low-low end and high-high end here in China. So, that’s kind of one marker of change that’s happening quickly. There is this growing conversation that things are changing slowly but they’re changing for the better. And consumers are becoming more and more aware of these things, and they’re gonna demand product improvement within China.

Ryssdal: And, you know, those consumers have more and more money. And obviously — well, maybe not so obviously — but they, in theory, have more and more of a say in how things are going. Where do they go? Who do they buy from?

Tong: Well, they buy things with logos on them. There is a big sense of brand-name awareness here in China. And there’s kind of this flight to quality going on, where they will pay sometimes top dollar for something that they think not only has the brand-name cachet that they can impress their friends — and that’s a big thing here in China, as you know — but also because they know the quality is going to be good. For instance, mostly when people buy a laptop computer, they’re going to buy a Western brand. They’re going to buy HP. They’re going to buy IBM. There’s a sense that the Chinese brands are inferior.

Ryssdal: Interesting that IBM’s owned by Lenovo, though, don’t you think?

Tong: Well, and the other interesting thing about that is my cousin is this big computer fanatic. And he kind of shakes his head when he talks about IBM used to have this kind of American cachet. And now it got bought by Lenovo. And there’s a sense that well, you know, it’s part of a Chinese company now. And by definition, in his words, the quality’s gonna go down.

Ryssdal: Scott Tong, Marketplace’s man in Shanghai. Thank you, Scott.

Tong: OK. Thanks, Kai.

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