The Next Superconsumer?
With the US sinking in debt, the world's biggest corporations are targeting China. And Shanghai is their beachhead…
The resident of 550 Huaihai Road in Shanghai is a rather unusual migrant. Born in Wisconsin on 9 March 1959, Barbara Millicent Roberts is the world's most famous supermodel. She drives a Corvette convertible, owns a dream home with a pool, parties with jocks and adores shopping. In the US, she was a prom queen and a role model. In China, she is emerging as an ambassador for consumer culture.
Better known as Barbie, this 30cm-tall icon was first sold in China in the early 1990s, but it was not until 2009 that she was given her own home in the retail heartland of Shanghai. Mattel, the world's biggest toy company, marked her 50th birthday by opening the planet's largest Barbie emporium. Covered in pink plastic, the six-storey doll's house on Huaihai Road became an instant landmark. Martial arts star Jet Li and the actor Christy Chung were among the celebrities at its launch. This was more than a party; it was the start of a marketing campaign aimed at prolonging and expanding the lifestyle championed by the toy firm. For the Barbie market to continue to grow for another 50 years, the doll would have to make it big in China.
When I lunch at Barbie's place, in the fantastically kitsch restaurant with a menu devised by chef David Laris, it doesn't seem to be hugely popular. Along with Barbie™ burgers with Barbie™ pink sauce, Ken burgers, pinktastic pasta, doll-icious desserts and Barbie™ tini cocktails, the restaurant boasts generous promotional offers: those opting for the special meal receive a boxed set of Barbie plates and cutlery to take away.
I ask Liu Yunting, who works for an advertising company, what she plans to do with her new tableware. "I will use it myself," she says.
Isn't it a little childish? "Not at all. It is cute. This is much better than the stuff for children. We know better how to appreciate it."
Liu is a member of the fastest-growing consumer class: single women – or xiaobailing (white-collar princesses). They have high levels of disposable income and a craving for designer labels. For marketing moguls, they are the future face of consumer power. State planners forecast that half the population will be middle class by 2020.
Until recently, China was living within the planet's means. If everyone in the world consumed what the average Mr or Mrs Wang did in 2007, we'd just about stay within the sustainable resources of our planet. Humanity would have a balanced ecological budget. But, understandably, Mr and Mrs Wang wanted to keep up with Mr and Mrs Jones on the other side of the Pacific. That was human nature. It was also bad news for the environment, because if we all ate, shopped and travelled like those average Americans, we'd need 4.5 Earths.
In recent years, the planet's largest corporations have become dependent on the Wangs catching up with the Joneses. The US had shopped until its economy dropped. Sinking in debt, plagued by obesity and increasingly dependent on military might to protect its lifestyle, the world's superconsumer was groaning with indigestion. Europe was too decrepit and conservative to take up the slack, so global manufacturers, retailers and restaurant chains were desperate to stimulate the Chinese appetite. Shanghai was their beachhead. While information firms and political lobbyists headed to Beijing and manufacturers flocked to Guangzhou, retail giants almost invariably chose Shanghai for their China headquarters and their first showrooms. From Kentucky Fried Chicken, McDonald's and Starbucks to Louis Vuitton, Gucci and Chanel, international brands made the city a giant shopping mall. Shanghai became the biggest, richest, most globalised mass of modernity in China, home to the most luxurious boutiques, the tallest buildings, the nation's first formula one track, the biggest auto companies, the second busiest port in the world and a gathering horde of international salesmen trying to sell the American consumer lifestyle.
Chinese consumers have never had more options. America's Wal-Mart, France's Carrefour, Britain's Tesco and Japan's Ito Yokado are expanding in China faster than in any other country. Each year, they open hundreds of new stores in the expectation that demand will surge as more rural migrants move into cities and work their way into the middle class. Young urbanites are becoming as enthusiastic about french fries, burgers and fried chicken as their counterparts in New York or London. When the first KFC opened near Tiananmen Square in 1987, it was seen as a novel western dining experience; 20 years later, the company has 2,000 outlets in 400 cities, employing 200,000 people, making it easily the biggest restaurant chain in China. In roughly the same period, McDonald's had grown from one restaurant to 800.
Along with the changing diet came a surge in obesity, diabetes and heart disease. Obese children used to be rare in China; now nearly 15% of the population is overweight. Shanghai is often cited as the worst affected city. Barbie™ burgers and the like are part of an increasingly carnivorous diet. To feed its growing livestock, China imports huge quantities of soya, much of it from Brazil, which has resulted in accelerated clearance of Amazonian forest and Cerrado savanna. Like many other wealthy cities, the high-protein, high-octane, jet-set lifestyle is being paid for elsewhere.
I meet my guide, Emily Zhang Huijia, a connoisseur of consumption, outside number 18 the Bund. Once the China HQ of Standard Chartered Bank, the Bund is now a centre for shopping, eating and clubbing. Emily is its PR manager. A fashionista since her teens, she has worked for Gucci, Yves Saint Laurent and Chanel, and says she was brought up on Vogue, Glamour and OK! magazines.
By western standards, her childhood was not privileged. In 1985, when she was three, her family got its first colour television. In 1992, around the time the first Barbies went on sale in China, they bought their first air-conditioner; so did everyone in the neighbourhood. The Zhangs had their first fixed phone line installed when Emily was six. By the time she was 16, they were connected to the internet. My family in the UK had a phone three generations before Emily's, but her parents went online four years earlier than mine.
By 2006, the average person in Shanghai owned two mobile phones, 1.7 air-conditioners, 1.7 colour television sets, more than one fridge and spent 14,761 yuan a year (around £1,455), some 70% more than the rest of the country. They use almost twice as much toilet paper as the average in developed nations and have a bigger carbon footprint than people in the UK. The city is consuming beyond the planet's means, and its appetite is growing by the day. By the time Emily's generation were earning a salary, they could afford more than the essentials; they could buy style. "I'm a Shanghai girl," she says. "We don't earn so much, but we see luxury brands every day. We don't want to buy anything else."
Most of her friends are in the industry and they share information about discounts and sample sales. At her first sale, she blew a third of her salary on Fendi sunglasses. "It is like a fever," she says. "The price is so low, you cannot refuse."
Like many a proud shopper, Emily lists how much she saved rather than how much she spent. She is wearing a half-price Dior watch reduced by 2,900 yuan (£286). In her 40 sq m flat near Fuxing Park, she has dozens of other bags, accessories and clothes, including an Armani coat for 999 yuan (£98), discounted from 9,900 (£976). Compared with friends, she says, she is restrained.
In the last three years, Emily's monthly salary has increased from 3,000 yuan to just under 20,000, putting her firmly in the middle-class bracket. She eats at restaurants at weekends, has a French boyfriend, plays poker every Thursday. Business and pleasure are mixed. Her favourite after-hours hangout, she says, is the building where she works. "Bund 18 has the coolest nightclub in Shanghai, so it's probably also the coolest in China." We agree to meet there again at midnight.
After dark, the Bund's spotlit neoclassical pillars and low-rise architecture are reminiscent of London. On the other side of the Huangpu river, however, the futuristic Pudong skyline rises higher than almost anywhere on Earth, including one of the world's tallest buildings, the 492m bottle opener-shaped Shanghai World Financial Centre. Twenty years ago, most of Pudong was farmland. Today, it pulsates with light and colour.
The crowd in the club is made up mostly of expat western men and their Chinese girlfriends. In the cigar lounge, Emily introduces me to a French food and beverage manager, Julian Desmettre, who describes how the nouveau riche from Taiwan, Hong Kong and Singapore have made the city their playground: "Shanghai is like Paris during la belle époque. This is the city of wealth and style, where people must show their money, where they are judged by how they dress, where they look down on those with less than themselves."
Julian arrived in Shanghai as a student eight years ago with 5,000 yuan in his pocket. Now, he has on his wrist an Omega watch worth six times that amount. "My life here is better than in France. I have a big apartment, a cleaner, a compound with a pool and a gym. It is so comfortable, it is almost too much."
Most revellers in the lounge are European. "Where can I meet Chinese partygoers?" I ask Emily, but she is reluctant to recommend anywhere: "There are clubs, but they are the type of place you'd find in a second-tier city. The music and decor are not as good, but Chinese men prefer them because they don't want to be near foreigners. Chinese women are different. They are more open. They go where the quality is."
Wandering around local bars and restaurants, I meet bar owners who organise prostitutes for customers and set up trips to karaoke parlours, where hostesses strip off to sing. Shanghai seems to be emulating the consumer sex industry of Tokyo; the hostess bar scene is reminiscent of Japan at the height of its "bubble economy".
The next day, Emily introduces me to Cindy Tai, the head of a marketing agency and former head of EMI Music in China, who helped organise the first Rolling Stones concert in Shanghai. As a child during the Cultural Revolution, Cindy and her academic parents were sent from Shanghai to a farm on the nearby island of Chongming. "We had enough to eat, but nothing to spare. We were very happy if we got a little meat on the table once a week. My parents suffered. I vowed that one day I would buy them whatever they wanted."
She has achieved that ambition; now, her dream is "to create an organic farm. I'd like to grow fruit, vegetables and rice, raise pigs and chickens. And to have a helicopter, because the traffic is so bad." But like many affluent consumers around the world, Cindy's environmentalism seems selective. She has blueberries delivered from an organic farm, baguettes from a French bakery in Xintiandi and olive oil from Italy. She eats out at least once a day, and at one point she and her French husband had four cars: a BMW, an MG and two Mercs. Now they have two; a sign, she says, of their increasing concern for the planet. Later, however, she reveals that her interest has switched to yachts. One is moored near their second home in Cannes.
She may yet get another luxury car. Cindy is a member of the Shanghai Porsche club, mainly to keep up with her friends, and has been invited to an awards ceremony hosted by Jaguar. I shamelessly ask if I can come along.
The venue for the Jaguar Gorgeous Award Party is a renovated mansion off Huaihai Road, a few minutes' walk from the Barbie store. In cocktail dresses and designer suits, guests sip wine in the courtyard, where they are treated to a sales pitch for the new 5-litre XKR: "It is a wow car!" gushes a PR lady who introduces herself by her westernised name, Seraph. I am sceptical: "But you can barely move in Shanghai's traffic. Why would anyone want such a huge engine?"
"Rich people never take the subway," Seraph replies. "Even if the traffic is bad, they need a car. Jaguar is nothing but gorgeous and beautiful."
In the five years to 2009, sales of luxury cars in China rose five-fold, de luxe villas seven-fold and luxury goods tripled. This was just the start of a spending splurge: the number of wealthy households is forecast to double again by 2015.
Earthwatch Institute estimates that if China's 1.3 billion people were to consume at the same rate as Americans, global production of steel, paper and cars would have to double, oil output would need to rise by 20m barrels a day and miners would have to dig an extra 5bn tons of coal. If it followed the US appetite, China would chew its way through 80% of current meat production and two-thirds of the global grain harvest. "China is telescoping history," says Lester Brown, president of Earthwatch. "It forces us to focus on what happens when huge numbers of low-income people rise rapidly in affluence. Chinese consumption shows the need to reconstruct the world economy."
Instead of relying on an ever greater consumption of resources to generate growth, Brown says mankind needs to move to a fairer, more sustainable model. Yet the opposite seems to be happening. Global corporations and the communist government are trying to make China the greatest shopper of them all. In Shanghai, that goal is already being realised. By one estimate, the average carbon dioxide emissions of its residents have already overtaken those in Tokyo, New York and London. If there is a glimmer of environmental hope, it is that even in Shanghai people have not yet fully embraced western levels of throwaway consumption. Many still prefer flasks of hot tea to cans of Coke, and in the supermarkets the average basket of goods is smaller than in the west and profit margins are lower. This thrift is not inspired by environmental concerns, but by a traditional desire to live within one's means.
Even so, the rest of the country has some way to go to catch up with Shanghai, which is what the government wants. This will require a great deal more energy and raw materials. To provide everyone with a Shanghai lifestyle, factories will need to churn out an extra 159 million refrigerators, 213 million televisions, 233 million computers, 166 million microwave ovens, 260 million air-conditioners and 187 million cars.
The retail market, meanwhile, is becoming less diverse the bigger it grows. Paul French, a Shanghai-based marketing consultant, says the problem is that the shopping malls designed to create the image of a good life do not reflect reality for most people: "They are building more and more malls filled with luxury brands. Like the power stations in Soviet-era Russia, they are being built not because of demand but because of prestige. Every official in China wants one to show their city is on the international map."
These emporiums are designed to generate desire, not meet needs. Many are dismissed by locals as gui gouwu zhongxin (ghost malls) because they attract so few customers. Yet in Shanghai they are everywhere. Xujiahui intersection, for example, is ringed by six department stores. Among them is the Orient Shopping Mall, boasting Estée Lauder cosmetics, Rolex watches, Cartier pens and Dior lipstick. Passing through the revolving door one weekday morning, I see not a single customer. Not even a window shopper.
Edited extract published in The Guardian, Saturday 26 June 2010