The New Rich – Attitudes about Money, Face, and Wealth in China

I just finished reading The Millionaire Next Door, and even though it’s about how America’s wealthy become wealthy, I started to notice just how many of the mistakes mentioned in the book described the new rich in China. In contrast to what we have heard about the Chinese savings rate (around 30% for households), it seems that many of those struggling to reach the middle class are spending massive amounts of money on luxury goods to appear rich (or here).

One of the ideas in the book is that there is a difference between being rich (usually a high salary) and wealth (the accumulation of investments above what would be typical for the salary). An example of this would be that a person making $70,000 a year who accumulated 1 million dollars is much “wealthier” than a person who makes $1,000,000 every year, but has only accumulated $1,000,000.

The author describes a number of traps people fall into which requires them to maintain an appearance of being rich, but prevents them from becoming truly wealthy. In China we might call this trap “face”.

My favorite example of this is that many of the doctors who work at the hospital wear a Rolex (which starts at $2,500 on Amazon), which would be almost 9 months salary for a factory worker. The watch though only comes after they have bought a new apartment, a car, and paid to get their child into the best schools. The watch must also match your expensive suit, shoes, and I-phone. If anyone of these pieces were missing, people would “know” that you weren’t really rich.

Interestingly most of the Chinese people I talked with agreed it was better to have a knock-off of a famous brand, than to own a decent quality product from an unknown company.

However, these are just things that rich people have, and according to the author, this isn’t true wealth.

When I shared this thought with a co-worker today, she was genuinely surprised to learn that I thought a lot of these status markers were a waste of money. To her money was something that should be spent more than saved (which I talked about in re-thinking stability). When I commented that Taiwanese people joked that Mainland Chinese are more concerned with looking rich than being rich, she laughed because it was so accurate.

To Beijing this isn’t so funny. China’s growing disparity between rich and poor is another item on China’s increasingly long list of worries. The wealth gap is something the gov’t has been trying to sweep under the rug by banning certain luxury phrases from advertisements, but conspicuous consumption has already been established as a requirement for those seeking even middle class status.

Fun side note: When talking with my co-worker it became clear that to her there was no division of wealth in a family. If your parents were rich, then that was your money too. Conversely she was also impressed by the idea of the elderly in the US striving to be financially independent of their children. 

8 responses to “The New Rich – Attitudes about Money, Face, and Wealth in China”

  1. Keeping up with appearances (as well as the Joneses) is also a big thing with Hongkongers. It must be said, though, that many if not most Hongkongers consider the extravangant spending habits of the mainlanders as a wee bit overboard.

    > To her money was something that should be spent more than saved […]

    I would hazard to say this line of thinking doesn’t sound like the usual Chinese attitude to money, even among the older Hong Kong Chinese (who, frankly speaking, are even more Chinese than the Chinese on the mainland). There has long been a kind of life axiom among the [older, even ‘moneyed’] Chinese that, sure, money is ultimately for spending, but one’s gotta save up first before the spending happens. I don’t know – maybe it’s just the crowd I run with.

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  4. Chopstik says:

    I might also suggest there may be some generational differences here (though not entirely). Nor, for that matter, is it limited just to China. Plus, I suppose this might not be entirely unexpected when two generations (of children) have been told that consumption is bad only to have the doors opened (to the candy room). Time will tell if such rampant consumerism will be tamped down or if it truly spirals out of control.

  5. Meryl Mackay aka 马美丽 says:

    The first time I went to Beijing (in 2001), I stayed at the Peace Hotel in Wangfujing. I was with a group and we generally ate together but one day I came down to breakfast on my own. The fuwuyuan, a young woman, looked me up and down and placed me at the worst table, next to the kitchen door. I laughed silently and thought “Oh no, my dear, I don’t think so!”. I relocated myself to a much better table and reflected that the fuwuyuan saw an older foreign woman, casually dressed and wearing no jewellery, not even a wedding ring. I hate conspicuous luxury! I have no jewellery and even though I have been married for 47 years, wear no ring. My husband does not think this is important and also wears no ring. My watch is a child’s watch as I have very small hands and wrists. BUT I love spending money on books and I love to travel. It is very interesting to observe what people spend their money on! I have elderly parents and do not consider that their money belongs to me. I have children who are financially more wealthy than me so I hope to spend most of my money before I die. My kids don’t really need it! I love handbags and own about 20 – all fakes! I think that fakes are much more fun than the real thing.

  6. Anonymous says:

    chinese always live for other’s words.they think ‘face’ is much more important than he real life.

  7. Meryl Mackay aka 马美丽 says:

    Here in Scotland, we are getting many more Chinese tourists. Last week my friend was in the Scottish capital, Edinburgh. She went shopping in Harvey Nichols – a branch of the famous London department store which stocks expensive goods. There was a Summer Sale taking place and my friend said that the Chinese tourists were buying many luxury items.

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