Growing Expenses

By staff reporter LU RUCAI

It can be taken as read that the average urban, middleclass, young Chinese adult would not be seen dead in footwear other than that bearing the Nike, Reebok or Adidas label. Personal gadgetry of no less than digital camera, handset and MP3 is also mandatory for members of this trend-conscious social sector.

The need of young people to be instantly identifiable with their peer group by virtue of garb, hairstyle and accessories is nothing new. But exorbitant price tags on the image enhancers demanded by today’s market economy generation set them apart from those of their antecedents.

Young Brand Consumers

Zhang Xiaoqiang is a 14-year-old student at Beijing’s Wanshoulu Middle School where, according to him, almost all his classmates ride Giant brand bicycles. Consequently he has no compunction about wheedling his mother into buying him a mountain bike from the Giant retail outlet in Beijing’s Gongzhufen. “Can’t I have this one?” he asks, plaintively, “It’s only slightly over one thousand yuan.” As she falters at the price, he brings the ace out of its hole: “Did I tell you my last exam results? I’ve moved up five places in my class.” Defeated by his blandishments, the boy’s mother resignedly takes out her purse.

A recent survey by Sinomonitor International of middle school students aged between 12 and 19 revealed that 42.2 percent of respondents regard famous brand commodities as the ultimate symbols of cool, confidence and taste. Another survey in April 2005 by the Social Survey Center of the Chinese Youth Daily revealed that 78 percent of the 1,150 teenagers investigated were brand devotees. A student from Beijing’s No. 154 Middle School seriously acknowledged, “If I wore an unknown domestically produced brand of trainers, my friends, who all wear Nike shoes, would not want to know me.”

Desire for costly expressions of teen chic has also infected primary school students. Qi Wanyi is an 11-year-old fifth grader at Beijing’s Shangdi Experimental Primary School. In addition to textbooks and exercise books, her schoolbag also contains a cell phone, an MP3 and an electric palm dictionary. “All of my classmates have an MP3 and electric dictionary, and most of them have a cell phone. My MP3 and dictionary were gifts from my parents to help me with my English, and they bought me the mobile I asked for so that they could reach me whenever they need to,” she happily explains.

Wanyi’s mother runs a small real estate agency. She seldom refuses her daughter’s requests for what seem to her to be luxury commodities, and shells out around RMB 5,000 a year on Wanyi’s wardrobe and school articles. She explains, “Things are completely different now from when I was at school. My parents lived more or less hand to mouth, and these sophisticated learning aids simply did not exist. I don’t mind buying my daughter the electronic “toys” and designer label clothes she wants as long as she does well at school.”

Planned Pocket Money

In addition to having their consuming desires satisfied by the parental purse, most school age children also received either a monthly allowance from their parents, or a lump sum cash gift at Spring Festival from their elder relations. A young person’s pocket money, taking into account the annual cash gift, is on average RMB 2,300 a year, but can be as high as RMB 40,000, according to a recent investigation by Xu Anqi, a researcher with the Research Institute of Sociology under the Shanghai Academy of Social Sciences.

Some young people are content to let their parents take care of their Spring Festival cash injections, but many take responsibility for their own money management. They spend it mainly on clothes, footwear, periodicals, books, Western-style fast food and movies. The frustrating aspect of their avid consumption, as far as parents are concerned, is that today’s must-have item of clothing or accessory is tomorrow’s cast-off. In a study of youth consumption behavior by the Guangzhou-based Guangzhou, Hong Kong and Macao Youngsters Research Institute, nearly 40 percent of respondents admitted that they generally lose interest in and discard items they have bought soon after their purchase. Young people are, therefore, subject to impulse buying, spurred on by the influence of their peer group or by wanting to emulate their favorite pop stars, according to Chen Jijing, vice president of the institute.

This observation is endorsed by Yang Shunlin. His store next door to the Bayi Middle School in Beijing’s Haidian District caters mainly to student essentials, from stationery to sports wear. “Teenagers are big spenders,” Yang confirms, “If one buys something that appears cool to the others, they automatically follow suit.”

Keeping up with the Joneses’ Kids

A study on youth consumption psychology by Ding Shiwei’s class of senior high school students at Jiangmen Municipal No. 1 Middle School in Guangdong Province, however, indicates that parents are at the root of voracious youthful consumption. As the majority of young people are only children, they are the focal point of the household. Parents think little of spending disproportionate amounts on the living and schooling needs of their son or daughter as long as they perform well at school. In other investigations made in Beijing, Tianjin and Shanghai, 85 percent of families admitted that footing their child’s monthly consumption bill costs one-third of the family income. This being the case, offspring take for granted that their parents will buy them whatever they want, and don’t stop to consider whether or not the material demands they make are affordable.

But the famous brands and electronic toys with which parents pamper their children is, in addition to encouraging them to do well at school, a way of ensuring that they feel equal to confident among their peers. Liu is a textile worker and her husband drives a taxi. Their combined income is strictly average. Yet when their 16-year-old daughter, a first-year student at senior high school, asked her mother to buy her an international brand of cosmetics she consented without hesitation. “Her friends and classmates like to look their best when they get together at weekends and on holidays, and she would be laughed at if she couldn’t compete,” explains the mother. This is one example of parents being even more “face” conscious than their offspring, the conclusion reached by Liu Huilin, a researcher with the Heilongjiang Provincial Academy of Education Science. It is another reason for the ostensibly uninhibited and unrestrained level of “youth” consumption.

Financial Management or Bust

In September 2004, the Wenhualu Primary School in the Shenhe District of Shenyang, provincial capital of Liaoning, became the first primary school in China to include fundamental financial management in its curriculum. In this weekly class, fifth graders learned about foreign currencies, how commodities are priced, investment, credit and taxes. The school now offers a progressive experimental economics course for first to sixth graders on what money actually is, the various ways of spending it, how to plan expenditure, and the pros and cons of investment.

Many other primary and middle schools offer similar classes, 100 in Shanghai alone. Students at the Mayu Primary School in Beijing’s Shijingshan District keep pocket money accounts, a project jointly designed and launched by the Beijing Youth Science, Technology, Culture Exchange and Service Center and the Bank of Beijing. Its aim is to guide children along the road to rational consumption and efficient money management.

Ma Baohong, director of the You’anmen Branch of the Bank of Beijing, points out that it is common in other countries for banks to offer money management services designed for young people, but that there are few in China. The Bank of Beijing recently launched a young person’s account, and has a special counter that helps children to manage their pocket money. Parents are delighted at this innovation, and also grateful for the bank’s brochures explaining the fundamentals of finance management.

Young people need not be afraid to spend money, but should be shown exactly how, if only to be better prepared for the financial burden that their own offspring will impose when the time comes.