Business
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| Money vs.Power |
Which came first the chicken or the egg? This age old question has sparked many a debate. Similarly, which is more important, money or power? Culturally speaking, expats raised in a western world may argue money equals power. After all, in this day and age, what can't money buy? An ocean away, those born in modern China might see things quite differently. Why?
Imperial Roots
Last month this column discussed the effect emperor rule has had on the loyalty to leadership in China. Indeed, then and now, loyalty can be a matter of life and death. Leaders are often portrayed as possessing absolute power. Another branch from this same tree, is the Chinese' current view towards money and power and which of these two items is more important.
For a society rooted in emperor rule, power is more powerful than money. Currency is nothing more than a tool in the hand of those empowered with the authority to control it. The existence of money itself is certainly the choice of those ruling. Not to mention what policies are put in place to manage it. Simply put, those in power govern commerce. This is a reality perhaps more easily forgotten in the west than in China. Imagine someone possessing something of value, but being unable to realize that value because of an imperial edict. Worst case scenario, this could include a death sentence, whereby no amount of wealth possesses power.
Subtle Reality
The democratic system setup in the west may leave the average citizen at times less aware of the subtle reality that money is not all powerful. Growing up in such an environment, especially during so-called "peace times" could lead some to believe that with money, anything is possible. Which is why expats need to study up on this cultural difference, especially if planning on spending extended time in China and engaging in business.
Instead of feeling a sense of entitlement based on money alone, the infamous element of "relationship(s)" (关系 guānxi) comes into play. In other words, the proverbial "friends in high places." The truth is expats with some amount of money quickly realize how futile efforts can be without knowing the right people. Of course, mentioning this may bring thoughts of corruption and misdeeds to mind. However, this isn't true in all cases.
Take for example the issue of finding an apartment. Many expats rely on renting for housing. Particularly those just arriving, may feel they have little option but to use a realtor to help them find a place. To engage a realtor, one must have money. Typically a real estate agent is paid by the renter a fee equal to one months rent for helping find a place. This fee is paid at the time of signing the rental contract. In other countries, where housing may be more available, and/or the real estate market is more transparent, a realtor would rarely if ever be used for a rental. Instead, renters go directly to an apartment community to rent a place. There is no "middleman" so to speak, i.e. the realtor, in the transaction. The landlord is a corporate entity, such as a property management company. An onsite leasing office handles showing the property to prospective residents and signing the contract with those who desire to live there. Once a tenant, repairs are handled through the maintenance department of that same office. In this scenario, there is no realtor fee and no "relationship" needed to get a place. Money more or less is the deciding factor. With money, one either has the power to rent or not.
In China, money isn't quite as all-powerful when finding a home. For one, money is wasted on paying a realtor who sadly all too often does little more than show some photos and unlock a door to see a place. In addition, money can't always lead to finding a suitable residence. The homes listed through realtors tend to be overpriced and overrated and nothing more than leftovers that everyone else doesn't want. Another big issue is that ads may not be current or authentic. Photoshopped photos look amazing online but all too often are a nightmare in person or the place has long since been rented and is being used as nothing more than bait to lure prospective clients to make contact. The best apartments can go completely unadvertised and get rented directly from the landlord by those with a relationship with them. Without any local friends and family though, an expat is going to have a really tough time finding such reasonably priced, well decorated dwellings. This long-winded, but very relevant example highlights a simple but painful reality, in China many problems can't be fixed with money alone.
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| With only money, you may not be able buy what you want. |
Mutual Misunderstanding
While expats arriving from the west may be more prone to misunderstanding the importance of money in China, they are not alone in doing so. Locals certainly likewise feel cash is vital to getting things done. However, they too may overestimate the power of money. The role money plays in Chinese society has changed dramatically. Initially after modern Communist China was established in 1949, reports indicate money did not wield nearly as much power as it does today. Instead of commerce, everything from housing to food was controlled and allocated by the government. This method of handling things is often expressed in Chinese as: 按需分配 (ànxū fēnpèi), which literally translates to "allocate according to need." A ticketing system was used for a period of time, whereby tickets were administered to each person according to the government's estimation of need. These could later be exchanged for a particular item. Think of it as a massive, all encompassing food stamp program that had nothing to do with being rich or poor. Everyone was on "welfare." The stamps essentially were "money," thought not actual cash. Items simply weren't available for "sale." Even if someone had money, they couldn't walk into a store and buy something. A government issued ticket was required. This history proves money isn't all-powerful. Conversely, it is absolutely subject to political policy.
As modern China adapts over time, a gradual tolerance for open commerce has come to exist, although often with geographical restrictions. This is why places like Macau and Shenzhen came to be so special, as they were some of the earliest areas to enjoy a relax in restrictions against private business. Similarly, places like Fujian, Shanghai and Tianjin now have specific "free-trade zones" whereby enterprises may enjoy a greater level of commercial freedom while still operating under the communist canopy of the CCP (Chinese Communist Party). The bottom line is this, even today the opportunity to buy and sell, i.e. make and use money, isn't without government approval, monitoring and management. This is evident by the negative list listing the sectors still restricted to foreign investment. Locals are also restricted from certain investments. Leaving a portion of the market exclusively to government owned and operated entities. The major changes in policy which have occurred and continue to occur, allowing a level of free commerce in China, has blurred the lines between money and power. Yet, any real investigation of the issue will reveal the underlining culture hasn't. Ultimately, political power trumps money in China.
