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John Findley Blog

John Findley is a China specialist having lived, off and on, in China for around 30 years. He now lives in Newcastle. He is a highly experienced senior executive and now runs his own migration business (a genuine independent contractor) supporting high-end executives to work in Australia.

Imagine 100 million air conditioners turned off!

Thursday, October 25, 2012

I’m still on the road in China, today in Beijing.  Along the way, I have been talking with many people.  It seems ordinary folks in China are doing it tough presently.
Inflation has been high for several years and prices of everyday items seem to me to be about 30% to 40% higher than a couple of years ago.

In the face of these escalating prices, most Chinese have not had a wage increase for several years.
So Chinese families are doing it tough, the household budget is straining beyond its limits.
What can the normal family do about this?  Not much really. Chinese do not complain to their local politicians or vote an opposition party into power.  And despite some high profile cases (Foxcon wages riots and a couple of auto manufacturers increasing wages) Chinese do not take recourse to strike action.
The reaction to the cost pressures must be to tighten the family's belt, which gets me to the nub of this message.  Many families seem to have turned off their air conditioners this summer.  The heat in small apartments must be oppressive, but the families must just bear it out of economic necessity.
I have seen some economists claiming that recent reduced electricity demand in China is positive proof of an industrial slow-down.
Maybe the economists could look behind the figures and contemplate the effect on power consumption when 100 million air conditioners are turned off.
From my anecdotal evidence, the economy does seem to be “off the pace” of several years ago.  I have visited 30 of my agents so far on this marketing campaign.  The fortunes of my agents are quite varied, some are really downsizing, but some are growing even faster than before.  On my amateur evidence I would say business is still growing and the good businesses have not hit any obstacles to growth.
Another of my homespun observations: the agents who are doing well are private enterprises who have invested their own money, they have “skin in the game”.  They have always had a professional market presence, trained their staff well, attended well to clients and not tolerated waste in their business.
On the other hand, those that are not doing well seem to be the government-owned agencies.  They have no equity in the business and no incentive to succeed as their jobs are secure through all travails.  Their offices have always been messy, they have an uncaring approach to dealing with the public and time does not matter to them.

Cheers for now...
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