Red Envelopes, Gray Income, and Green Tea

In China, the possibility of “gray income” can be an important factor when choosing a job. “Gray income” simply refers to receiving “gifts” in exchange for improved service. It is most common when someone controls access to something like health care, education or job opportunities. The difference between this and bribery seems rather arbitrary, but people in China seem to accept the former while being disgusted by the latter.

The prevalence of gray income jumped out at me the other day after a good friend told me of a discussion he had in a local noodle shop with an off-duty policeman and his friend. At some point the policeman’s friend brought up the issue of gray income and how police officers have many sources of it, which the policeman vehemently denied. His friend than countered with a single piece of damning evidence, somehow this lowly public servant was able to afford to send his daughter to study in the US.

I’ve noticed similar disparities between people’s income and the purchases they make, and many Chinese netizens have taken notice too. In my office we joke that doctors’ coats have many pockets, because they need many places to hold red envelopes. Colleagues brush it off by saying that this is simply a way for the patient to thank them.

More often though, gray income is disguised in gift giving.

I was unaware of this when I first started working at the hospital. During my first month a doctor handed me a box of green tea after I mentioned that I enjoyed drinking it. As soon as the words escaped my mouth, I realized that I had unintentionally placed a social obligation on him that required him to fulfill my reasonable wish (we’ll talk about gift giving more tomorrow). I didn’t feel bad about accepting the box of tea from him since I had seen the closet he retrieved it from was full of similar boxes. Having been given a nice box of tea, I thought it best not to ask too many questions; it was a nice gift.

Yesterday, I finally finished that box of tea, and asked one of my co-workers in my office if she had any tea leaves I could use for my daily tea (it’s winter, and hot beverages are one of our few sources of heat). She pulled out a massive chest and removed a new tin of tea for me. I tried to decline the gift, since I really just needed a pinch, but she insisted, “People give me tea all the time.”

Being nosy (for your sake), I asked, “Who gave you the tea?” To which she replied, “An old gov’t official. He wanted to thank me for helping his mother stay in the hospital.”  From our following discussion it was clear that in her mind this was a “gift” and not a “bribe” because it had come after the mother had checked-in.

Like all public hospitals in China, we often operate at 110% capacity, with patient beds spilling into the hallways. Unfortunately, gifts often grease the wheels when it comes time to check-in.

Interestingly, this same co-worker has complained to me numerous times about the wasteful spending on banquets and the way others indulge themselves at public expense.

This form of bribery has even created an entire market of goods that fall into the “gift” category, that are meant to aid in opening doors and making connections. A trip to the local supermarket reveals the low-end range of these items: tea, coffee, mooncakes (around Mid-Autumn Festival), and a variety of local specialties. All of these regular products come in gift form at much higher prices. When you move into more specialized stores, you can see the range of these products move to ever higher price points.

While green tea might be slightly more innocuous than sliding a red envelope into someone’s hand, in reality there is little difference between the two. This socially acceptable bribe is still bribery and encompasses a much larger segment of the population, making it difficult for morally compromised recipients to blow the whistle on the more egregious offenders.

29 responses to “Red Envelopes, Gray Income, and Green Tea”

  1. Meryl Mackay aka 马美丽 says:

    Well, I have lost my Chinese teacher. She intends to return to China to take up a job at her old place of employment -she was a music teacher in Chengdu. She cannot find a comparable job in Scotland and I think that her self esteem has suffered as a result. The thing is, she now has a British husband and a 13 year old daughter from her first marriage. Her daughter has been 2 years in Scotland and absolutely loves it. She has blossomed at her Scottish school. My teacher asked me whether her daughter would get a better education in Scotland or in Chengdu. I think she knows the answer but anyway I said without a doubt her daughter would be better educated in Scotland. I know that she won’t listen to me as the real agenda is not daughter’s education. Desperately I invoked the matter of “gray income”. I said “Do you really want to return China and having to give your daughter’s teachers money presents so that they give her some attention and are nice to her? You say how nice and helpful her Scottish teachers are to her and how she has made friends and loves school here.”. She listened to me but I have lived long enough to know that people do what they want to do and are well able to persuade themselves of the rightness of their decisions. So back to Chengdu and maybe what she herself makes in “gray income” will be enough to channel to her daughter’s teachers so that the girl is well looked after at her Chinese school.

    • I feel sorry for the daughter, having experienced Scottish school life at her most important formative years – and now having to return to mainland Chinese school life (and probably Chengdu school life, to boot). I personally know lots of people in that situation – and I often tell them the ‘equalisation’ rule: the time, effort and money spent trying to make up for something could have been better used just to maintain the status quo instead. (It often works out cheaper in the long run.)

    • Pudding says:

      I’m curious what you mean by “comparable.” I don’t mean anything else by that, just curious.

      Going along that train of thought, but not implying that your friend is this way. I would say that unless you are filthy rich, maybe 10 mil or more and can afford to just “move” to a different country and live, or find a job that you really don’t need, grey income is probably pretty important.

      For instance, I bet that with grey income there are some people I know that make more money than say they could in America. The tip of the iceberg is a monthly salary of 5000RMB. But below the water is maybe another 5000RMB a month or more. Move them to another country where they don’t have a grey income source and they are stuck with 5000RMB. Not implying that your friend was looking for this.

      I feel for her having to go back to China. It’s a bummer. But I hope that she can make the best of it.

      • M says:

        dunno about US, but in most of european countries is minimum wage (where they have this institute) bigger than 5000RMB, so actually nobody is stuck with such low income in Europe (in UK it should be around 6GBP/hour * 168 = 1008GBP / 10000RMB minimum age without any grey shit

      • Meryl Mackay aka 马美丽 says:

        Pudding: To answer your question, I mean that my friend misses the mianzi, the face that being an important music teacher in Chengdu gave her. She came to Scotland to study for an MA in music and did not return to Chengdu, instead marrying a Brit. Here in Scotland, she gives music lessons in her home but Scottish parents don’t want their kids to be another Lan Lan like Chinese parents do. So her job is quite low key and probably quite boring. She teaches me Mandarin and I am sure finds that quite boring too. She does not have to go back to China, she chooses to and ignores the fact that it is definitely not a good decision for her husband and probably not a good decision for her daughter. I do wonder how much she made in “grey income” back in China but I will never know!

      • Pudding says:

        @Meryl Mackay: I can’t seem to reply to your response directly. Thank you for replying. I wasn’t really expecting a response. So thank you. Wow, she misses the mianzi in Chengdu. She must of had quite of a teacher to have face as such. I know a few teachers and I wonder if it’s the sense of importance and social interactions that she misses. Anyway, who am I to speculate. It’s interesting to know. I’m not one to comment but, it seems that this is the worst case and somewhat common with relationships with people of different countries. One party getting bored, or unable to cope while residing within the other culture and wanting to move back.

        @M: My point was that if for instance a person much like my boss could go to America, he would have to play by America’s rules. If he made 2000$USD a month here on the books, with another 2-3000USD off the book from grey income, if he went to the States, it would be a lot harder to make that grey income and hide it. It’s pretty easy here since he has lunch with the local tax bureau every week, knows about every official in the area, get’s drunk at lunch with different police every week and has enough money in the family to send his kid to a top 5 US high school (private) and for his brother to drive a 1 mil USD car. He could not afford or maybe not want to deal move. His “grey income” would be important.

      • Lorin Yochim says:

        My wife recently passed on a expression that might help to sum up the feeling of working/living abroad vs. China: 好山好水好无聊, 好脏好乱好热闹! (hao shan hao shui hao wu liao, hao luan hao luan hao re nao!) Translated roughly: Beautiful mountains, beautiful water (or beautiful scenery), very boring! Very dirty, very chaotic, very lively! (anyone have a better word for 热闹?) The saying was actually summoned to describe the difference between Canada and China at Christmas, but more generally it describes the differences between life in China and guowai. I find it as apt a description as any.

      • M says:

        lorin I don’t find China much more exciting than Europe (at least not boring vs lively, for me as European it’s of course more interesting than home but if I should be neutral I wouldn’t say it’s bigger fun), compared to SEA is China very very boring country (just compare lively Bangkok with dead Beijing), no fun at all, so it’s sad but not even in this can China beat anyone, it’s because of Chinese people under commies, they are focused too much on money instead on having fun, people in Japan or Europe have more money so they don’t need to care about them so much and can just enjoy life, while people in SEA have less money and are enjoying life more than Chinese, so something went wrong in China with commie obsession with money

      • Lorin Yochim says:

        I guess so, @M, but blogs like this speak to the endless fascination of foreigners with the vicissitudes of life in China. Exciting was your word, not mine. Tenuous and risky might be a better word, but what one cannot say about life in China is that it is predictable (yes, I know, counter response already predicted). At any rate, Meryl is talking about a Chinese friend and the saying circulates amongst Chinese, including my wife. Put simply, there is something rather boring about middle class (and maybe middle-aged?) Western life that does not speak poorly of sense of safety and material security.

  2. thatcher says:

    The same system applies in a lot of countries. If it’s before the favour it’s bribery and if it’s after it’s a sort of tip for the service provided. I’m curious what’s your view on untaxed tipping (restaurant, cabbies and so on). Is that bribery? And if isn’t, how come?

    • Tom says:

      Yes, this is not unique to China. I’m generally opposed to tipping in all forms, as it no longer actually reflects the service but is just an expected addition to the bill. But, I think that the stakes in most tipping situations are a bit lower in western countries (more often than not for low wage jobs), and don’t usually involve public officials who already have a salary that has been adjusted to avoid a reliance on tips. In fact, the Chinese defend high gov’t salaries by claiming that this helps them to avoid the temptation of bribery.

  3. This may come as a surprise to some of your readers, but the lack of opportunities for grey income in Hong Kong is one of the prime reasons why so many mainland Chinese people dislike Hong Kong. Indeed, many mainlanders (admittedly, mostly bankers, lawyers, accountants and similar professionals) tell me that Hong Kong’s “no grey zone” makes it an “unfree” place to do business – talk about putting a whole new twist to the meaning of freedom.

    A prime, everyday example of no-grey-zoneness in Hong Kong happens in hospital maternity wards. Mainland Chinese have been coming to Hong Kong in increasing numbers to give birth mainly because of (a) our [relatively] higher standard of medical care, and (b) that the newborns will automatically have right of abode here in Hong Kong. Often, the mainlanders will enhance the medical care they receive with ‘gifts,’ on the supposition that what works on the mainland should work also in Hong Kong. Some mainland Chinese families on such maternity trips become ‘disappointed’ at the sight of their ‘gifts’ being refused by hospital workers (because the practice is unlawful under various anti-corruption statutes here and the law is actually enforced, unlike the general situation in the PRC).

    Another point of disappointment for mainland Chinese people doing business in Hong Kong is their inability to get their ‘gifts’ accepted by Hong Kong government officials so that their deals may be ‘fixed’ in their favour. This is the source of their complaint that Hong Kong is “not as free as China.”

    The culture of ‘gift-giving’ in Hong Kong is completely different from that in the PRC, even among the Chinese part of our society. To Hongkongers, gifts are gifts are gifts. I’m not saying gifts don’t serve a secondary ‘extra legal’ function here in Hong Kong (as is the situation in the PRC), but the main ambit of gift-giving here is simply the giving of gifts – which basically boils down to why the social acceptance of grey income is so widespread and entrenched in the PRC.

    • M says:

      so long story short – Hong Kong is like any developed civilized country unlike mainland China

      • No, not quite civilised or developed. The grey zone here in Hong Kong doesn’t operate in (what I personally consider to be) the primitive, person-to-person ways that you see in China. It operates on a corporate level, so that the lucre from the top (that disembodied corporate structure) trickles down to the actual persons involved in the game in the form salary ‘adjustments’ and bonuses. This aspect is the source of much irritation for mainlanders because they (mainlanders) tended to operate on a personal level for the grey income, whereas Hongkongers on a ‘corporatised’ structure for getting their grey income. Not that I’m saying most Hongkongers have grey income, but those who do, they avoid using the personal structure.

    • Lorin Yochim says:

      Well said, @thenaked listener. I may be stretching your point, but we ought to remember that not all “civilizing” processes are the same. As you point out, the de-greying of income is more about legal transformations that legitimize the gains of those who sit in privileged positions. Grey income is diminished under rule of law because it is no longer needed.

  4. Chopstik says:

    Reminds me of a recent ethical conversation with a friend. If person A (Zhang) works in a company that has a relationship with person B (Li) and helps to process order for Li but is also friends with Li, then there should not be a problem. If Zhang then receives a gift from Li that is given as a friend with no implied quid pro quo (Zhang will not do something else to help Li, per se), is that ethical. Having spent much of my career working for companies that take ethical considerations very seriously, I suggested that the gift should be returned. Zhang argued that it was a gift from a friend with no other implication and therefore was under no obligation to return it. When questioned as to what would happen should his company discover the gift, his argument was “why would they learn about it?”. I believe that answered the ethical considerations.

    Is this a cultural difference? Ethical? Moral? It’s certainly subjective if nothing else.

  5. Pudding says:

    Factory life is full of these things.

    Every supplier that comes gets a lunch or when there is a problem the factory gets lunch.

    Every time I need a person to do their actual job, I have to lube them up with lunch and booze.

    I’m 100% positive that the factory manager is getting kick backs but there really isn’t a way to prove it. And since if he got caught nothing will happen does it matter? Perhaps he would have the factory strike against the people that caught him.

    Factory owners will take the managers out to do things and lube them up. Like going strawberry picking, only to before hand make a deal with the field where you pick strawberries. They set a price, then the owner actually takes the remainder amount, but writes off the higher amount, thus taking a kick back from his own factory.

    If your rid China of grey income, I bet a significant amount of people couldn’t afford cars, houses, etc.

    Since everyone does it, if you don’t do it, you are at a disadvantage. Gifts for teachers, doctors, etc. Everyone else gives them. You don’t, well.. I’ll let you guess what happens.

    The guys who helps me process me get visa things done. I’ll have to get him a gift. If not, well, next time, it might take too long and I’ll have to fly out of the country or some stupid junk. Thus a 300RMB bottle of Chinese white lightning ensures that next time, or this time, there is no problems with processing and time frames.

    QC gets lunch and drunk when they come.

    I will say that the people that I can actually talk to, they may not be friends, but they talk pretty candid about these things. They all know it happens. Some may think it’s bad, some if not all agree it’s a hassle. But all agree that you have to do it. There is nothing else you can do. It’s the only way to live and get things done.

    Any of you seen the inside of a average Chinese person’s car trunk? I bet 80% or more have a stash of coffee, tea, booze, cigarettes and mooncakes for times that they need to give a gift. Red envelopes in the glove box. That’s how common it is.

    • Tom says:

      All good examples of how problematic gift giving is. In my department today we had to wine and dine two doctors after they were turned down for scholarships to study abroad…otherwise they would be unhappy with us, even though they didn’t deserve the awards.

  6. […] Seeing Red in China Your guide to modern China Skip to content HomeAbout…About TomAbout Yaxue CaoAbout CaseyComplete ArchiveSuggested SitesChina Books to ReadThe Best China MoviesMap of China中文 ← Red Envelopes, Gray Income, and Green Tea […]

  7. Lorin Yochim says:

    I think a couple of things might be getting confused here in the comments. Maybe that’s because Tom didn’t draw the line very carefully in the original post. First, grey money doesn’t refer to bribes per se, but to money earned outside of one’s ordinary salary, and especially money that is not reported as official income. Teachers tutoring outside of the school, for example, is grey money, assuming that they are doing it informally and it is not reported and taxed. Accepting bribes is money that will never (for obvious reasons) be reported officially. I’m not sure if that is typically called grey money, but clearly bribes to officials and working on the side are not the same thing. The gift-giving for special treatment at hospitals is rent-seeking of a kind typical in an inadequately resources system. As to the need to grease the wheels of private business with dinners and booze, that is clearly not out of the ordinary in the business world and another matter altogether.

  8. Meryl Mackay aka 马美丽 says:

    Lorin: Thank you for the very interesting saying but is it “hao zang, hao luan”? My Mandarin is not very good, especially now I have no teacher. I am sure that the same saying can be applied to Scotland. I remember feeling “hao shan, hao shui, hao wu liao!” when I moved here from a large English city near London, many years ago. Now I have got into middle age, I like the peace and quiet! My Chinese friend thinks that the education system here is “too soft”. She has been trying to get her daughter to do extra school work at the weekends but the girl refuses as none of her friends do this. So this Chinese “Tiger Mom” sees no problem in returning her girl to the Chinese education system, conveniently forgetting all the stress, suicides and cheating that this encompasses. As an educational psychologist said on BBC TV today “Chinese parents may provide an excellent homework routine which may foster academic success but it does not necessarily bring success in adult relationships.”

    • Meryl, I’m inclined to agree with your Chinese friend that the UK education system is too soft – but for a different reason. The UK system has become very americanised, and that’s why I reckon it’s gone pudgy.

      As to what the BBC said, trust me, living on the doorsteps of China here, relationships in real life among the Chinese are becoming increasing (shall we say) ‘in reduced circumstances.’

      I don’t wish to ruffle the sensibilities of certain commenters here (knowing full well their proclivities for all things Chinese), but when I was in school, I did my homework (and not!) and kicked around with my pals (and not!) all the time. My parents, as adults, with one-up over me as a minor, made sure that I saw in them making a balance with their work and leisure. Lead by example, in other words. All that homework, homework, study, study nonsense that we Chinese are famous for, just don’t work anymore in this day and age – and Chinese parents (especially them) should wake up to this fact.

      I’m not suggesting that parents (in Hong Kong or China, or any other kind of parents) be lax and lackadaisical about their kids studying, but if we can’t show them some kind of balance in our own lives, the kids are never going to know what ‘balance’ is. We talk the big talk about ‘harmony’ and ‘being in balance’ with one and all (or choose our favourite pluglines) – and then we fly off at a tangent and lay this 24/7 study-till-ya-drop horse manure on the kids. No wonder we have to legislate for filial piety.

    • Lorin Yochim says:

      What you say about the “Tiger Mom” here makes sense, Meryl. But I there is something missing in her comments about the soft education system (this varies, but “soft” is a misunderstanding, I’d say). A major problem for many Chinese parents (i.e., those accustomed to the Chinese system) is that in most Western public systems there is less opportunity to game the system to hoard advantages. Of course in Western systems middle class parents manage to do so, but it is much more difficult than in China. In the city I live in at the moment in Canada, there is much provision for “choice” in schools from junior high up, so Chinese parents are relatively satisfied. They are allowed to pursue “the best.” In China, advantage accrues largely due to differentials in income etc., but also due to weak protections of equality of access. Hopefully that is not too vague and opens up the discussion a bit.

  9. Meryl Mackay aka 马美丽 says:

    thenakedlistener: Thank you for your interesting comments. I personally did not find your tone offensive. I guess that the older I become, the less sure I am about anything. Young people in my family do not appear to be overly stressed by their studies but, as you say, society is changing in UK, maybe becoming too soft. One thing that I have observed with pleasure, is that the parenting skills of younger relatives seem much improved than those of my generation. Kids talk more openly to their parents these days. I felt so sad when I asked my Chinese teacher what her daughter felt about returning to a Chinese school and received the reply “She is a good girl. She said “Mama, whatever you decide is OK with me.””. What price filial piety?
    Tom: Sorry to take this Thread away from your original Post but this whole Tiger Mom thing is big here as well as in US.

  10. […] an employee of a hospital, I occupy a prime spot in the guanxi hierarchy in that I know a few doctors in several departments. Even though my connections are very limited in […]

  11. […] operational goals, incentives, and compensation strategies in such a way to compensate for the gray money that exists in the system (over-prescription of pharmaceuticals and red envelopes in particular) […]

  12. […] dishonesty. If the award is something like a banquet, a wedding gift for a child, or perhaps a nice box of tea it would be easier to accept without guilt than cash. This means that the periodic gov’t […]

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