Saving face or saving money?

Posted on August 20, 2012


Understanding what something’s worth is never as straightforward as it might be.  Yes, there’s supply and demand, but there’s at least three extra dimensions in Beijing.  Distance, Haggling and Face.

Distance is a factor everywhere, of course, as convenience always comes at a premium – but when nipping to the shop at the next corner could be a twenty minute walk in Beijing, shopping around takes on a whole different aspect.

That said, many tourist destinations haven’t really cottoned onto the notion that tourists will pay more in a premium spot.  Drinks at the gates to The Summer Palace, for example, aren’t any more expensive than in the local supermarket.  A peeled cucumber (surprisingly refreshing – Pimms hasn’t made it into the venues yet though) or bottle of water will be the same wherever you get it from.

Bars, on the other hand, have caught onto the idea that location matters.  The same beer can very tremendously on the same street – from 50p to £6… I even found one lovely bar that was selling “small beers for £1” or “large beers for £1” – honestly…

Haggling should probably go in some fancy equation that takes into account the distance you’ve already walked (and stalls already visited) with more traditional negotiation stalwarts like anchoring and opening bids.  Truth be told, I wouldn’t know how to represent “strength with which stall holder and her colleague are holding onto my arm” though…

But the most interesting point is not what us foreigners will pay, it’s how the Chinese approach goods.

There is something of a running joke here that foreigners will go to any lengths to find fake goods to buy whereas the Chinese will go to any lengths, and pay almost any price, to secure the real deal.

But only as long as the value is visible.

You see, on anything where people can’t see how much money you’ve spent (an air-conditioning unit, for example) then cost is the most important consideration – and they certainly drive a hard bargain here.  Spending more because you believe the finish is better, or the engineering or because the coffee tastes better when it comes from that place for £2.00 makes no sense if other people won’t notice.

On the other hand, spending four times as much as you would in Italy on a Lamborghini – well that’s an extremely visible use of cash and well worth spending.

It’s sometimes hard to move in this city for people collecting your empty plastic bottles to recycle, squeezing every last mao of value out of them.  Yet when a colleague went into Milano Coffee in Hangzhou last month, he was greeted at the door by a hostess who offered him a seat and a menu featuring coffees that went up to £16 per cup.

It was clear that this was a place to bring clients and earn face, no matter what the coffee actually tasted like.

2p or £20 – in China, either is a reasonable price for a cup of coffee.

But £2?  You must be a crazy foreigner!!!