Yes, even activities for children are over-priced status symbols in China.
I was walking near Robinson’s Mall — one of the most upper class of upper class shopping establishments — in Xiamen the other day with my family, and we saw a sign for Little Gym, a global chain of gymnastics centers originally from the USA, on the exterior wall.
Lets check it out.
We walked in and were ohhed and ahhed by the little gymnasium filled with mats, and bit stuffed triangles, parallel and uneven bars. The lady there let my kid run around and play on the stuff. Cool. She invited us back the following day for a free demo class.
We returned and my daughter got her free class along with around 20 other kids. One Little Fat Ass Emperor attacked one of the instructors. Cool.
Then I asked the price:
US$2,000 per year. Roughly 40 bucks per class. Around double the cost of the same thing in the USA.
This is China, a country that’s being absolutely torn apart by class divisions. This is a country where the cost of a once a week gymnastics class for children is higher that the national minimum wage.
It’s not just the service or the product but the price tag itself that the rich like to pay for. Being able to afford something that your peers, family, and associates know is expensive is to boost your standing.
We can afford Little Gym, we can afford to drive our 700 thousand dollar Porches to Walmart like they were Volkswagens, we can afford to pay $100 for a shirt that’s not any higher quality or really any better than a $1 shirt, we can afford to order 3x the amount of food we will actually eat in a restaurant just to show that we can afford it.
One of the biggest commodities in China, in the world for that matter, is invisible. It’s a symbol that only exists in the minds of the people who participate in this phantom economy. It’s status, and it’s sold wherever goods and services are marked-up far beyond what is reasonable.
Status symbols land you jobs, status symbols gets you promoted, status symbols seal the business deal, status symbols get you married — status symbols are real investments that have a value which goes beyond merely showing off.
As Felix Gervais stated on The China Chronicle:
Actually, I’d dare to say that most of the bad experiences I’ve had in China regarding customer service were for rich-class goods and services. It might sound paradoxical, but it’s because most rich-class goods and services are not about the intrinsic value, but about the experience and the image. Rich folks don’t care about how soft the fabric of their $450 Italian designer shirt is, or the improved drivability of their luxury car, or in the aforementioned case, the quality of the concert. They care about how awesome they will look, and the relationships with other rich people they can foster through buying all that.
Cheap, low price, on sale are phrases that only have value to the under-classes. Low priced things are for the poor, and buying them shows your underclass position. In a country like China, where hundreds of millions of people became middle class and hundreds of thousands became rich in the span of a single generation, the hunger for consuming and displaying signs of this newfound status is tantamount to a feeding frenzy. It’s not really the expensive product or service that’s of value but the exclusivity of being able to afford it.
If Little Gym was reasonably priced it would lose an element of its value.