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burger time no more?

Here's another post where I'll use rumors to make a larger point about China. Maybe I'll make some sense even if the rumors prove false...

Today at work, I heard that two of our cafeteria service providers are losing money and are going to close up shop. Unfortunately, one of them is the Rendezvous Cafe, famous for having very serviceable American style hamburgers. The other serves more local fare which I prefer to get from another restaurant here. So no great tragedy.

Restaurants going out of business. Nothing to write about you say? But these two shops are always busy at lunch. I mean mobbed. After all they have captive audiences out in our high tech park. About 5k SMIC employees alone to target.

Apparently they can't make money with their current prices. I know, I know, busy restaurant not making money - just raise prices until you maximize profitability while giving up some customer volume. But not here, because our general affairs management won't let the restaurants raise prices. So instead the restaurants may be moving out (we'll see if I can lobby on their behalf), and leaving a lot of underserved, hamburger-hungry employees behind.

Which brings me to my point. I think most people here still haven't internalized the change to a market economy. They're used to a command and control system where prices are set from on high. This despite the tremendous amount of price haggling (for knock-offs, for fruit from the local stand, even sometimes for taxi fares) that happens here. In some ways, haggling even reinforces the arbitrariness of prices since haggling here is fundamentally about lack of transparency in the transaction and oftentimes at 3x or more mark-up for non-locals.

Many here can't yet fully trust the market to find the "right" price at which the restaurant would make money, and employees would still get fed. So either our people fix a price or the alternative would have to haggle for each burger sold (adversarial pricing can be justified since the price you paid would be based on your haggling skills).

Maybe more penetration by eBay and Taobao and things will change. Online auctions with multiple prospective buyers transparently bidding up goods until they are at their right price could be a nice mental transitional step.

July 28, 2005 at 09:48 PM in China | Permalink


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