07.08.07

Roman Barbershops and Chinese Consumerism

Posted in Barbershop, Business 'n Economics at 3:51 pm by Benjamin Ross

In July, Fuzhou is just about as hot as any place on earth. For my own sanity I have purposefully refrained from doing the Celsius to Fahrenheit conversions, but I am guessing the temperatures are regularly in the 100’s with humidity hovering somewhere between 95 and 98%. It’s the kind of weather where I walk outside and before I have even left my apartment complex, I have already broken a sweat. Yesterday, after a long bike ride in the heat, I decided to treat myself to a hair wash. For a change went to an upper tier (高等)barbershop, as opposed to my barbershop which is considered middle tier (中等).

The upscale barbershop I chose has a Roman theme and is located on Jintai Lu, one of Fuzhou’s more upscale, shopping streets. One of the little sisters at the Roman shop, named Mao Mao, used to work at my barbershop and I had promised her that one day I would come in to her shop to get a hair wash.

roman barbershop china
The marble floors and wooden furniture give the Roman barbershop an air of luxury which was absent in my barbershop.

From the first step into the Roman barbershop, the feeling is one of luxury and comfort. The walls the shop are decorated with Roman style columns. The mirrors and barber tables are all made of fine wood. The floor tiles are marble. There are hand-crafted wooden couches with fine upholstery and a wooden bookshelf with replicas of classic English novels. The walls are covered with fake but tasteful oil paintings. Even the bathroom is donned with wooden doors and fine metal work.

Along with the posch environment comes the expected price hike. A haircut in the Roman barbershop is 58 RMB and a hairwash is 24 RMB, compared with only 30 for a haircut and 12 for a wash in my shop.

After Mao Mao and I chatted for a few minutes, she took me to the washing area, which looked like a set of a Turkish bathhouse from a cheesy Hong Kong movie. As she washed my hair she asked me, “Do you think there is any difference between the hair wash here and the hair wash at the other shop?” Mao Mao asked me.

As Mao Mao massaged my head, I could feel that the shampoo was of higher quality than the cheap stuff used in middle tier barbershops, however the actual service she was providing me was of no difference than what was given in my shop.

couch barbershop china
The customer waiting area, with finely upholstered couches and coffee table.

“Not really,” I replied. “It seems pretty much the same.”

“That’s because I learned how to wash hair at your shop. The service here is exactly the same, but it is more expensive because of the atmosphere.”

Mao Mao finished up my two rounds of shampoo, then my conditioner and neck massage, and as she had indicated, everything she did in the Roman barbershop was exactly the same as in my old shop.

While Mao Mao was drying my hair I told her my thoughts on the Roman barbershop.

“This shop is really nice, but I probably won’t come back here too often. It’s nice to see you, but as you said, I can get the same service at the other barbershop for half the price.”

“Yeah, I know what you mean.” Mao Mao said. “Most of our customers don’t necessarily come here for the service.”

“Is it the atmosphere that they like?” I asked.

“The atmosphere is important, but more than anything, our customers like to come here because a lot of rich people get their hair washed here. This makes it more appealing,” she said.

bathroom china
Even the bathroom doors were decorated.

This represents an interesting consumer pattern which I have noticed in other Chinese businesses as well. That is that wealthy Chinese people will pay high prices to know that they are patronizing a business which strictly caters to…other wealthy Chinese people.

It reminds me of a time I was at a bar in Fuzhou with a Chinese friend of mine who himself was a former bar owner. The bar had a pleasant ambiance, a good house band, and the beer was cheap, only 10 RMB per bottle. We were there on a Saturday night, and it was virtually empty.

“Why do you think business is so bad here?” I asked my friend.

“The beer is too cheap,” he replied. “Chinese people like expensive things. If the drinks are not expensive, the patrons will think it is not a good bar. They will not want to bring their friends there and risk losing face.”

In China, a product or service with a fancy package and an upped price tag will often generate more sales than an identical product sold at a discount price. As China’s nouveau riche demographic expands, so does the demand for high-end products and services. Whether these products and services are of higher quality than those at a lower price is questionable. However, for many what they are paying for is not necessarily better quality, but the image of better quality. As for me, I could do without the marble tiles and fancy upholstery. I’ll still be at the old barbershop, getting my hair washed for 12 RMB.


 

06.30.07

Professional Recycling

Posted in Barbershop, Business 'n Economics, Fujian at 1:41 pm by Benjamin Ross

One summer when I was 10 years old, I heard a rumor at summer camp that there was a grocery store in my neighborhood which would pay cash for recycled aluminum cans. For the next 4 weeks, I collected all of the aluminum cans from fellow campers until I had nearly filled an entire garbage bag. At the end of the summer my dad took me to the grocery store. I proudly showed the clerk my bag full of cans which was nearly half my size. He told me I was a responsible little boy for caring so much about the environment, and then handed me $1.29 cash for my summer worth of can collecting.

5 years later, I started my first real job, working as a sacker in a local grocery store. I was paid $4.25 per hour, which was the minimum wage in Kansas at the time. It didn’t take me long to figure out that labor is worth more than materials in the USA.

recyclers bicycle
A professional recycler hauls the days findings through the streets in Fuzhou.

While I was working at the barber shop, three or four times per day, a middle aged man or woman would rummage through the trash can in front of the store. There was a man who would collect bottles and cans, a woman who would collect the plastic disposable cups we used to serve the customers water, and there was even a lady who would come every few days to collect all of the hair. By the end of the day, there was hardly anything left in the trash.

To a casual observer, these people might seem to be beggers. Fuzhou does have its share of panhandlers, but these are not the same people who are digging through the trash Rather, the people who collect our disgarded items are professional recyclers.

In Fuzhou, recyclers can collect .07 RMB for an aluminum can and .1 RMB for plastic bottles. At this rate, it would take about 109 aluminum cans to equal 1 US dollar. This rate is not too far off the one I was given that summer I collected cans at camp. The return is still not high, but when you consider a low-level service industry job requires 4 hours of work to earn 1 US dollar, the prospects of making a living off of recycling suddenly become more attractive. Add that China’s densely populated cities make the process of bottle collecting more efficient than they would be in the US, and it is not surprising why professional recycling is such a common profession in China.

In addition to recycling cans and bottles, professional recyclers also collect and/or buy used electronic devices, books, magazines, cardboard, CDs, and virtually anything else which at some time had value. Some of it is resold, and some is broken down for scrap. The recyclers ride their bikes through city streets with big signs placed in front of the handle bars which read 高价回收 (high price recyclying) and contain a list of items (usually household electrical appliances) which they will buy.

The future will only tell how much longer recycling will remain a profession in mainland China, and presumably as the price of labor rises, the draw to professional recycling will recede. But as barbershop workers are still making only 24 cents an hour, recycling stands to remain a viable profession for the near foreseeable future at least.


 

06.22.07

I must have a chip in my ATM card which says “Give Me Fake Money!”

Posted in Business 'n Economics, Chinese Bank Rants, Personal Anecdotes at 8:51 pm by Benjamin Ross

It happened again…I was having lunch at Fuzhou’s newest (and only) Indian restaurant today, and after receiving the bill, I handed the waitress a 100 RMB note from my wallet. A few minutes later, she meandered back to my table, handed my 100 back to me, and using the typical face saving protocol kindly asked, “Do you think you could give me a different bill?”

Knowing exactly what she was implying I felt the bill in my hands. “Wow, this is definitely a fake.” I told her. “I had no idea. Sorry about that.” She smiled back at me and I gave her a new bill.

fake 100 RMB ren men bi Chinese yuan
One of these bills is real, and the other is counterfeit. Both came from ATMs.

The bill in question had come from an ATM. This is not the first time I have received fake money from an ATM in China, nor the second, nor the third. It’s the fourth time in three plus years. At this rate, the Bank of China is probably distributing more fake money per year than the Parker Brothers. The general rule of thumb in China is that if you receive fake money, you must say so before you walk away from the transaction. Otherwise, it is your own responsibility (read: fault). Therefore, it is not uncommon to have your money turned down for various reasons, even if it is real. Last week a cab driver refused to accept a 100 from me because a chunk, literally smaller than one square centimeter, was torn of one corner. On several occasions I have been the victim, or the attempted victim of hit and run fake money scams, usually involving taxi drivers with fake 50’s.

I like to group counterfeit money incidents into two groups 1) my fault and 2) not my fault. The last time I received fake money was from a Chinese fast food (快餐)joint where I was having lunch. I did not realize that the 50 RMB note they gave me as change was fake until I tried to deposit it at the bank and it was confiscated. This instance was my own fault since I accepted the bill and walked away without saying anything. This is the way things are done in China, and I am more than willing to play by the rules so long as I can use the rules to my advantage when it is appropriate.

However, I find it hard to deem myself responsible when fake currency is dispensed from a state run bank. I must add that since my last episode with fake Chinese money, a Chinese friend has clued me in on how to report it if you catch fake money coming from an ATM. Apparently if you count your money while standing in front of the ATM, and receive a fake, you can call the police from your cell phone. If you do not move away from the ATM until the police come, the security camera images will then provide ample proof that your counterfeit currency came from that particular ATM. This seems like a feasible solution assuming there isn’t a crowd of people waiting behind you to use the same ATM. In a country of 1.3 billion people, this is rarely the case. Personally, I have no problem examining my currency whenever I am handed change from an individual, but I do not think I am out of line when saying that this step should not be necessary when using state run banks’ ATMs.

However, the most annoying part is not the fake money itself, but the fact that no Chinese people believe me that a Bank of China ATM could give me fake money, even though it has happened 4 times now (counting one from the Agriculture bank) in 3 plus years. “That is impossible.” “Counterfeit money doesn’t come from banks.” “Somebody must have given that to you.” “You are a foreigner, you just don’t know the difference.” These are the kinds of responses I get. The reason I am positive all of these fake notes come from ATMs is that 95% of all the 100’s I use come from ATMs. There is no bill larger than the 100. I usually go to the ATM, withdraw 800 RMB (since it is mentally like 100 U.S. dollars), and then break those 100’s down into change as I buy things. Whereas fake 50’s often come from change, this is impossible with a 100, since it is the largest denomination of Chinese currency. Every time I have received a fake 100, I have traced it back to an ATM.

I doubt that Chinese ATM’s are sophisticated enough to dispense disproportionate amounts of fake currency to foreigners, but you never know. Has anybody else been getting fake money from ATM’s lately or have even the ATM’s now been trained to specifically rip off the lao wai?


 

06.21.07

Competition Around the Block

Posted in Barbershop, Business 'n Economics at 11:43 am by Benjamin Ross

Last week I went with my friend Mary to get her hair cut and help her translate. The barber shop she wanted to go to was a new one located just a block away from Mr. Zheng’s barber shop where I had worked for a month. From my first step inside I could tell that this new barber shop was far ahead of ours in terms of ambiance. The walls were decorated in a modern black, red, and white motif, and there were live plants placed around the shop’s perimeter, adding to the modern look and feel. The hair wash beds and barber chairs were of higher quality than those in our shop and appropriately matched the walls and decorations. But what stuck out more than anything was a row of brand new computers with LCD monitors set off to the side of the store. Sitting in front of the computers were customers gleefully enjoying a game of counterstrike or chatting on QQ as they had their hair washed.

Mary enjoys a pre-cut massage as she checks her e-mail.

For me, this is the perfect answer for a problem I have long had with Chinese haircuts and hair washes…they take too damn long. Put me in front of a computer with Internet, and suddenly sitting in a barber shop for an hour becomes a lot more appealing.

But what was the most striking of all was the price. A hair wash was 15 RMB, (as opposed to 12 RMB at my shop), but the price of a hair cut was exactly the same, 30 RMB. Had I been a regular customer, and not had any allegiance to my former employer, it is likely I would never go back to Mr. Zheng’s shop again. The new shop was clearly a better atmosphere, and with the added bonus of computers there would be no turning back.

This should spark some concern for Mr. Zheng as his shop is already competing with four other barber shops on the block. As China transitions to a market economy, competition has been rapidly transforming the way Chinese businesses operate. In some sectors, this change has been slow, but in the hairstyling industry, the competition has been vicious, with the result being high standards of service and tight margins for improvement.

I remember one conversation I had with Cheng Qing in which he told me, “There are three factors which will determine the success of a barber shop. First is the ability and technique of the barber, this is 30%. Then there is the service: How friendly are the little brothers and sisters? Is the barber pleasant to be around? etc. This is another 30%. Finally there is the environment in the store. This is accounts for 40%.” If Cheng Qing’s words are accurate, then Mr. Zheng will have a difficult time competing with this new store, regardless of how talented his barbers are.

Young customers battle through levels of Counterstrike as their scalps are massaged by little brothers.

Unlike many other sectors of the Chinese service industry, most hair salons (in Fuzhou at least) provide excellent service. In my time working in the barber shop, I never once saw an employee take any action towards a customer which I would consider rude by either Western or Chinese standards. This is absolutely not the case with Chinese hotels and especially restaurants where staff are often negligent at best.

When Mr. Zheng asked me to give a speech about service standards in American barbershops and how our shop could improve based on the American model, I was at a loss for content. If I had been working in a restaurant, I could have easily spoken for hours: come back to tables to check on customers, don’t hustle customers when they are ordering food, memorize the contents of every dish on the menu, smile once or twice a day, et cetera. While this may not be the case in cheaper barber shops, I can honestly say that the service in our shop (which is considered mid-level) is equal if not better than what you would get in the United States.

With competition having already driven up service standards, and the negligible difference in barber’s abilities (I still do not even believe the 30 RMB barbers are any better than the 10 RMB barbers) the only option left is to innovate. Without any innovation of their own such as in-store computers, I see a bleak future for shops like Mr. Zheng’s.


 

05.21.07

More facts and figures: Money

Posted in Barbershop, Business 'n Economics at 2:39 am by Benjamin Ross

<< previous post

The other day I compared the hours worked between a job in a Chinese barber shop, my old American job, and my job as an English teacher in China. Here were the results in case you missed it. As an foreign English teacher in a Chinese university I was working 919 hours per year. As a white collar employee at an American company in the US I was putting in 1936 hours per year. And as a full time barbershop employee for a year I would be clocking 3542 hours.

The little brothers and little sisters keep busy doing hair washes. Each head nets about 32 cents.

Now I want to take a look at the pay if I were to actually work all those 3542 hours.

Most of the income of a little brother or little sister is not fixed. They get 150 RMB ($20 USD) per month in base salary, and the rest is based on how much work they do. The price charged to the customer for a hair wash is 12 RMB ($1.40 USD). Of that charge 2.5 RMB (32 cents) goes to the little brother or little sister who performed the service. Each hair wash service lasts approximately 35 minutes and also includes a massage.

On average each little brother or little sister washes about 150 heads per month, and average pay for a beginning worker comes to between 500 and 600 RMB per month (roughly $70 USD). Bear in mind, this is for a 70 hour work week.

I also should add that when a little brother or little sister begins work at the barber shop, they must go through a probationary period, during which they do not get paid. Once they have become competent at doing hair washes and massages, they can become an official employee and start making money. According to Mr. Zheng this takes anywhere between 2 weeks and 2 months depending on how fast the new worker learns.

Little brothers and little sisters can increase their incomes by learning additional skills. Those who have worked in the shop for several years and can do dyes and perms earn 6% of all the charges for the services they do. So for a 300 RMB ($40 USD) dye, there is a payout of 18 RMB ($2.40 USD). Therefore the higher ranking little brothers and sisters are able to make around 1000 RMB per month ($131 USD) per month.

Would I really want to do this 70 hours a week for 24 cents an hour?

If we use myself as an example, and assume I were to work at the barbershop for one year, making 600 RMB per year and accounting for the first month going unpaid, my hourly rate would be 1.86 RMB per hour. That comes out to a walloping 24.47 cents per hour.

I should add that even though this job pays less than a quarter an hour, by all my observations so far, it does provide what I would consider a living wage to its employees. This is assuming they do not have any dependents, which none of the little brothers and sisters do. Employees are all offered free housing in an 3 bedroom unfinished apartment which serves as the “dormitory” for the barbershop. Currently 8 of the 10 little brothers and sisters plus the 2 managers and 1 of the barbers live in the dormitory. One little brother and one little sister live with their relatives, and 4 of the 5 barbers rent their own housing. While 11 people sharing a 3 bedroom unfinished apartment with one bathroom may sound like unbearable conditions for us Westerners, this really is not that out-of-the-ordinary in China.

To be fair we also need to consider that living in China is much cheaper than it is in the US. For food, Mr. Zheng hires an “a yi” (maid) to cook meals for the employees. For a fee of 200 RMB ($26 USD), per month the employees get lunch and dinner every day of the week. That comes to 3.33 RMB (40 cents) per meal. For comparison sake, when I was working my job in the American company, I would frequently eat lunch at the Lucky Dragon Chinese Buffet. The cost was $5.99, which plus tax and tip usually came out to $8 per meal.

Another big question which might arise out of this is what about healthcare benefits? This is a big problem for us Americans, a non-issue for Canadians, and one which certainly pertains to China which does not have government provided healthcare. Living in the US we are accustomed to astronomical healthcare costs, which when paid out of pocket, can easily bankrupt an entire family. While I do not want to say healthcare for Chinese people is cheap (it definitely is if you are on a Western income), the prices are not as astronomical as they are in the US, even when you account for income differences. In the case of an unexpected medical expense, typical protocol is to borrow money from a family member.

So what does these figures tell me? Working as a little brother or little sister in the barbershop provides just enough money to survive off of, but certainly not much more than that. My coworkers are able to take occasional trips to the net bar, go out for a nice meal once or twice a month, and maybe save 100 RMB here and there, but they also only have 2 or 3 sets of clothes, sleep on beds without mattresses, and never have the means to take a vacation.

next post >>


 

05.19.07

Facts and Figures: Hours Per Year

Posted in Barbershop, Business 'n Economics at 1:50 am by Benjamin Ross

<< previous post

The past two weeks I have put more hours into my work than any previous job I have ever had. The job requires eleven hour days every day (weekends included) and I am only allowed off 3 days for the month (or 6 half days, 2 full days and 2 half days, etc.) Today I decided to calculate how this would to compare to a regular job in the United States.

My last full-time job in the United States was working telephone customer service for a company which sold wholesale employee benefits packages. I was 22 at the time, about the same age as most of my colleagues in the barbershop. First let’s compare the number of days worked per year.

Work days: Monday – Friday

365 days per year x 5/7 (to account for weekends) = 261 work days per year before vacation time is subtracted

Vacation Days

regular vacation time (10 days)

New Years Day (1 day)

Martin Luther King Day (1 day)

Labor Day (1 day)

Independence Day (1 day)

Memorial Day (1 day)

Thanksgiving (2 days)

Christmas (2 days)

total = 19 days per year

261 – 19 vacation days = 242 work days per year

At the barber shop there are no weekends off, so before vacation days are subtracted that is a full 365 work days per year.

Vacation Days

regular vacation time (36 days)

Spring Festival (7 days)

total vacation time (43 days)

And that’s it. Other than Spring Festival when the shop closes for a week, the employees must work all holidays unless they choose to spend their regular vacation days. That comes to 322 work days per year.

Now let’s consider the hours worked. My typical work day at my American job was 8 – 5 with a 1 hour break for lunch. That’s 8 hours per day. At the barber shop there are two different shifts, one from 9 am to 8:30 pm and the other from noon until 10:30 pm (sometimes a little later). Minimal time is given for lunch and/or dinner. The employees alternate between working 15 days of the early shift and then 15 days of the slightly shorter late shift. It normally works out to an average of 11 hours on the clock per day.

American job: 242 work days per year x 8 hours per day = 1936 hours worked per year.

Chinese barbershop job: 322 work days per year x 11 hours per day = 3542 hours worked per year.

That comes out to nearly double what typical American workers (and many Chinese white collar workers) put in. And this is for a job which pays a relatively low salary, even by Chinese standards.

If we want an even more gross comparison, let’s look at my last job teaching English in China. I was teaching on a 10 month contract, so to make it fair, let’s adjust the values over a 1 year period. I taught 15 class periods (each 50 minutes) per week. Including planning time, I probably put in 20 hours per week.

Like my American job, I worked Monday through Friday.

365 days per year x 5/7 = 261 work days per year (before vacation time is subtracted)

Vacation days

Spring Festival (20 days)

May Day (3 days)

National Day (3 days)

total vacation time: 26 days.

To adjust for the 10 month schedule, we need to multiply by 6/5 which gives us 31.2 vacation days per year.

261 work days (before vacation) – 31.2 = 229.8 work days per year

20 hours per week / 5 work days = 4 hours per day

229.8 work days per year x 4 hours per day = 919 hours per year.

Here are the totals again.

Teaching English in China: 919 hours per year (230 work days)

American job: 1936 hours per year (242 work days)

Job in Chinese barbershop: 3542 hours per year (322 work days)
So there you have it. My job in the barbershop requires me to put in almost twice the hours I would put in had I been working in the US and nearly 4 times the amount of hours I would have put in as an English teacher in China, not to mention that it also requires nearly 100 more work days per year as well. All this for a job which pays 800 RMB ($105 USD) per month.

next post >>


 

04.24.07

Pirates of the Middle Kingdom (update)

Posted in Business 'n Economics, Sino-US, Relations and Comparisons at 9:38 am by Benjamin Ross

continued from “Pirates of the Middle Kingdom”

After the initial harsh reactions to US complaints against piracy, China appears to be (at least according to the state run media) stepping up efforts to protect intellectual property. According to this article from China Daily, Chinese authorities have destroyed 42 million pieces of contraband. If true, this certainly is a step in the right direction for supporters of intellectual property rights. However, one sentence from the article had me concerned.

“Workers across the country set fire to 30 million pieces of smuggled and pirated audio and video materials.”

Did they say “set fire?” Was that really the only to dispose of all those discs? To me, the environmental ramifications of 30 million CDs going up in flames presents much more dangerous prospects, than the potential loss of profits for American companies.


 

04.11.07

Pirates of the Middle Kingdom

Posted in Business 'n Economics, Sino-US, Relations and Comparisons at 11:54 am by Benjamin Ross

China and the US have been in the news again, and this time it’s about intellectual property rights. The US is accusing China of not taking intellectual property laws seriously. China has responded by giving
the US the proverbial middle finger
. Here’s my take.

From the American Perspective

pirated DVDs piracy
A street vendor peddling DVDs from his bike in downtown Fuzhou.

Piracy of software, movies, and music in China is not just rampant, it is the default. I do not know a single store in Fuzhou where I could buy a legitimate copy of a movie, (or Windows Vista for that matter). While many businesses are succumbing to the pressure to use legitimate software, this is far from the case for private consumers. And as far as movies, buying a legitimate DVD in China is a ritual reserved for collectors or those who want to show off their wealth.

Clearly, more could be done. There is an entire floor of a mall here in Fuzhou which is dedicated to selling pirated software and movies. The discs are purchased wholesale by weight and then sold for slightly under a dollar a piece. Whether it’s Lionel Richie’s Greatest Hits, Adobe Photoshop CS2, or the Borat Movie, everything can be purchased for the price 2 liter bottle of Pepsi. This isn’t exactly an environment that you could say is making it difficult to distribute contraband.

From the Chinese Perspective

It’s not as easy as it sounds. China is a country of 1.3 billion people with a large governmental web spreading out from Beijing to every little nook and cranny across the Chinese empire. Enforcing regulations in big cities can be relatively efficient, but passing these laws down to small locals (where contraband is often produced), is not as simple as it is in the US, or any other country in the world for that matter.

US companies aren’t really losing that much money. This is just conjecture here, but say piracy was suddenly eliminated in China. It is difficult to imagine droves of Chinese rushing out to buy legitimate DVD’s and software. Many workers in China still make less than a dollar a day, and it would be a stretch to expect them to spend an entire days’ wages on a movie. This is even more so the case for software. People making $150 a month, would simply not buy a $300 copy of Photoshop. They would either not use it, or more likely, find other ways to obtain the intellectual property (i.e. downloading, or burning copies of the original).

It will be interesting to see what the next few moves will bring about. This is not the first time the US has pressured China on Intellectual Property Rights. China has responded (at least according to what I have read in Chinese media) by busting several piracy rings, and increasing the penalties for offenders. A friend of mine here in Fuzhou even witnessed a small store get busted for selling pirated discs. Nonetheless, it still seems finding pirated movies and software is no more difficult than it was three years ago, and finding the real stuff is still virtually impossible.

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