Grasshoppers and Ants: Consumerism in China and the West

Grasshoppers and Ants

Is Consumer Culture in China different from that in the West? Dr. Caryn Voskuil discusses the main consumption differences between China and the West and claims that though China is not a consumer nation just yet, it certainly on its way to become one

When I first moved to China, I was given a lovely apartment by my university and, being an American, I decided to decorate it. I took the money for the decorating out of my savings and, when finished, invited a new Chinese friend over for tea. Instead of admiring my lovely décor, she said: “Why did you spend money to decorate this apartment? You will only be here for a year or two.” Of course, I couldn’t understand her logic – she thought I had been wasteful! But I was thinking “I have to live in this apartment for a year or more, so it needs to be pleasant and comfortable.” This was my introduction to the consumer culture in China and to the differences between Chinese and Western attitudes towards consumerism.

You might be thinking – “What about the recent media photos of Chinese people wearing designer clothes and eating at western fast food restaurant chains?” It is true that in the big cities of contemporary China, the rampant consumerism of the west is finding its way into Chinese society. I doubt that it will be too many years before the average Chinese person is as product-obsessed as the average Westerner. But, for now, some major traditional differences in consumer culture still exist, and they reflect fundamental cultural differences between the East and the West. Let me identify a few of the most interesting:

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Perhaps the most striking difference between Western and Chinese spending habits can be seen in the area of savings. The Chinese save at a much higher rate than most Westerners do. A famous Chinese anecdote illustrates this difference: An old Chinese woman and an old American woman die on the same day and both go to heaven. At the gates of heaven, the American woman says, ‘I bought a beautiful house on credit 30 years ago, and I lived in it until the day I died. I paid the mortgage payment every month, and when I died, I had just made the last payment. The Chinese woman says, ‘I have been saving for a house for 30 years, and the day I finally had enough in the bank to buy the house of my dreams, I died.’

It is a well known fact that the Chinese save approximately 30% of their personal household income – a savings rate that is nothing short of amazing. If you don’t think so, just compare it to the average rate of savings in America, which currently hovers at around -1% (according to economic research from the St. Louis Federal Reserve). The personal savings rate is higher in most European countries than it is in the U.S., but Chinese savings are still three times as high as most European countries. Why is there such a disparity in spending habits? and is this disparity related to consumer culture?

Consumer Culture in China and in the West

As we all know, America is one of the richest countries in the world, and the average American carries a life that is relatively wealthy and comfortable. Americans tend to be optimistic about the future; This outlook derives from a relatively stable history (politically and socially), from having large amounts of disposable income, and from having a comparatively well developed retirement system (compared to that of China). The American standard of living is very high, and even the average American who is classified as ‘poor’ has running water, a car and at least one television set. Despite all of those, many Americans seem to feel that they never have enough money to meet their ‘needs’. They buy too much on credit and live beyond their means. This is in part because they are bombarded with advertising on a daily basis that converts ‘desires’ into ‘necessities’, while convincing them that their social acceptance, self-esteem, and even their happiness are dependent upon their purchases. Due to these reasons, Americans focus their consumer dollars on clothing, electronics, cars, entertainment, and other luxury items which provide them with immediate gratification.

The Chinese, however, have a different perspective rooted in a radically different historical and social environment. China, with a history of over 5,000 years, has been through periods of volatility and change unimaginable to most Americans. Still a largely rural developing country with a low per capita income, China houses a population of over a billion people, most of whom have minimal disposable income. This fact makes the Chinese rate of saving even more impressive.

In the big cities of modern China, more money is flowing. Many Chinese in urban areas pay monthly mortgages, and credit card use is becoming increasingly popular, particularly among younger generations. Advertisers have begun to target the more affluent in hopes of converting their ‘wants’ into ‘needs’. However, the old ways still influence spending habits of the majority of people in this ancient and prudent culture, and the Chinese have learned from history that nothing is certain – that emergencies can arise in the blink of an eye, and that one must depend on oneself and one’s family to overcome difficult times. Furthermore, the Chinese focus their family loyalties on the extended family instead of limiting them to the nuclear family as we do in most Western countries. Chinese families will commonly spend money to help out a cousin in-law or a grand-parent. Their consumption rate is focused on savings (for future security) and on products and services that pay off in the long run such as: education, housing, and investments.

An old fable tells the story of the grasshopper and the ant. In the tale, the grasshopper sings and dances while the ant stores food for the winter. This can serve as an analogy to understand the cultural difference between China and the United States: The American (like the grasshopper) spends money that he/she has not yet earned on bigger, better and fancier products and services, only to fulfill his current ‘needs’. The ant-like Chinese, however, tucks money away for the future, hoping to create security for itself and for its family.

Who is wiser? It is hard to say for sure, but what we do know is that the spending habits of each are easier to understand when one appreciates the Consumer Culture of each nationality.