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Can Someone Explain China Retail?

By Dan Harris and Steve Dickinson

I am being serious here. I just recently got back from a China trip with my eleven year old daughter. Like most 11 year old girls, she loves to shop for clothes and she really is quite knowledgeable about them. Though we went to other places as well, she did her clothes shopping in Shanghai, Beijing, and Seoul, Korea. She did virtually all of her buying in Seoul. Here are my findings and questions based on what I saw of and heard from my daughter. 1. The clothes that she liked that are also available in the United States, were pretty much the same price in China as in the United States. I do not understand this. I am pretty certain retail rents are considerably higher in the Seattle (where she does most of her shopping) than in most places in Beijing and Shainghai and I am absolutely certain the wages of the salespeople are considerably higher in Seattle (where everybody makes at least $8.50 an hour) than in Beijing or Shanghai. I also think the taxes are about the same. Now since the clothes are mostly made in China, should not the prices at these stores in China be less than in the United States? 2. There was absolutely nobody in any of the high end clothing stores. Nobody. It was weird, particularly considering there seemed to be a Burberry or Gucci or whatever store almost every block. 3. The Chinese stores that had clothes my daughter liked were very expensive. There were incredibly few stores with what I would call "original Chinese clothes," defined as clothes one could not find easily in a place like Seattle. Most of the stores that had nice clothes had stuff that one could fairly easily find in the states. Were we just missing the stores with reasonably priced, well made and cool Chinese clothes? 4. She wanted to buy up all of Seoul. There she was able to buy really great clothes at reasonable prices. I know Korea has become a real leader/trendsetter in fashion and art in Asia, so why were these clothes not in Beijing and Shanghai? Or are they in Beijing and Shanghai, but just for a lot more money or did we just not know where to look? I am writing about this because I see this as somewhat endemic of China retail. The cheap stuff is just not worth buying and the good stuff costs at least as much as in the United States. I do not understand the economics at work here. Do you? Please explain....

Full post as published by China Law Blog on April 26, 2009 (boomark / email).