On the End of Cheap China

Venetian_MacaoAt the Venetian Macao earlier this week

One of the best guides to the huge economic transformation that has taken place in China in recent decades is Shaun Rein’s The End of Cheap China. I’d agree with commentators who say it is compulsory reading for anyone wanting to do business in China or wanting to understand the contemporary Chinese economy. As I was exploring the Venetian Macao casino resort complex earlier this week, it was easy to see examples that would support one of Mr Rein’s main messages: that middle class Chinese consumers don’t see themselves as middle class, but rather as on the way to being rich, and their aspirations are reflected in their demands for luxury products – of which there is a dazzling array at the Venetian Macao.

The over-the-top brilliance in casino and resort operations that is the Venetian Macao – the world’s largest casino – also made me wonder about the business cases for the proposed new casino-resort complexes in Brisbane and Cairns. The project proponents must be incredibly confident in the quality of their proposed offerings, because I expect it will be hard to lure wealthy Chinese gamblers away from Macau, which offers a number of high quality casino resorts and is much closer for Chinese gamblers. The attraction of other destinations in Queensland, such as the Reef and beaches, must be an important factor in the business cases for the proposed Queensland casino resorts. The successful casino-resort proponents will need to work closely with regional tourism bodies to ensure the local product offering is at the quality required to help lure the wealthy guests they will need to make their casino resorts viable.

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11 Responses to On the End of Cheap China

  1. Katrina Drake says:

    Very interesting and insightful comment Gene. Glad you enjoyed your world exploration and fact finding trip.

    But, we are all so interested in how much money you put down on the table, and how much you walked out with !

    • Gene Tunny says:

      Haha, Katrina. I might practise on the tables in Brisbane first before going back to Macau. The high minimum bet means it would be easy to lose money fast! The prevailing attitude among the wealthy Chinese gamblers appears to be “easy come, easy go.”

  2. great blog. Makes me want to visit Macau!

  3. White Elephant says:

    The Gondola at the Venetian is inside for a reason. The airborne filth coming from the mainland is foul making it difficult to even see anything out your room’s window. Gene is spot-on regarding the QLD Casinos needing to promote the clean environment of the coasts and reef.

  4. Toby says:

    “middle class Chinese consumers don’t see themselves as middle class, but rather as on the way to being rich”

    – Hi Gene, hope you enjoyed the trip. Looks like fun! I think the feature of Chinese consumers you describe above is actually a key indicia of being middle class.

    • Gene Tunny says:

      Thanks Toby. I agree middle class consumers the world over are aspirational, but the attitude of many in the Chinese middle class appears extraordinary – they genuinely believe they will all be multi-millionaires and hence it makes sense to them to start buying the luxury goods associated with that lifestyle.

  5. Jim says:

    Gene

    “The attraction of other destinations in Queensland, such as the Reef and beaches, must be an important factor in the business cases for the proposed Queensland casino resorts.”

    High-end gamblers and ecotourists? I think you might find that they are almost mutually exclusive types of tourists.

  6. Katrina Drake says:

    We all know though that the way to wealth it not by spending it on expensive luxury goods – just listen to Warren Buffet about frugal living your way to wealth. Spending on luxury goods, that ultimately give you little luxury or pleasure, are a sign of loneliness and yearning for meaning. I imagine it would be extremely lonely as an only child in a population of billions. No sisters of brothers or cousins to grow up with , just billions of people to compete with at every stage in life.

  7. Mark Smith says:

    How do you know the people you saw there were middle class and not rich and how do you know what their aspirations are? Did you talk with them about these things?

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