Hutong Economics.....China Business?
I am in the middle of a post on why the Chinese drywall cases are no big deal but I can't seem to get out of my head a very short post over at Letter From China. The post is entitled "Hutong Economics," and it very briefly (I know I earlier already described it as "very short") discusses the opening and closing of a tiny Beijing food stand, all within an eight week span.
I can't get it out of my head because I am convinced there is some conclusion to be drawn from this post, yet I keep coming up empty. Does this reveal the impatience of Chinese businesspeople? Does it show that what is true of the United States is also true of China, that small businesses frequently fail because they are under-capitalized? Does it show that it takes more than eight weeks for a business to garner a reputation and to thrive? Why do you suppose "Letter From China" (conspiracy anyone?) failed to reveal the quality of the food produced at this stand and how much of a factor was this in its failure to thrive?
As always, comments welcome....
Comments (12)
Read through and enter the discussion by using the form at the endG.E. Anderson - April 21, 2009 12:45 AM
There's probably more to the story than meets the eye. While we can generalize about differences between "American" and "Chinese" businesses, I think Chinese business people are just as individualistic as American business people.
We may never know why the proprietors decided not to stick it out. Maybe one of them was overly impatient and didn't give it enough time. Maybe the local protection racket simply leaned too hard on them. Who knows?
As for the quality of their food, I can't imagine it was bad if Evan continued to eat there almost every day.
ScottLoar - April 21, 2009 2:37 AM
No mystery. The owners hadn't the capital to keep the venture going, they saw the location wasn't good enough to attract enough customers and so they folded, maybe to open again at a different location, maybe to open a different kind of shop. There is no profunditiy here, no grand lesson to be learned from life, just two folks trying to get by and - famously, as Charles Darwin noted - those that adapt survive.
Even a cursory review of any number of token millionaires shows multiple failures until one singular success. Why elevate this instance of a "xiaobing" stand to some philosophic measure of life and love, success and failure? Failed ventures happen all the time, despite diligence and sincere effort. Are you so removed from the human experience that such a commonplace occurence becomes extraordinary? This is not pathos on some grand scale, "this is just the way it is".
Hopfrog - April 21, 2009 8:53 AM
This story left me with a weird feeling as well when I read it yesterday. Sure people can say 'maybe the product was no good', or maybe this, or maybe that, but I think what makes it odd is that there are clues in the story to rule out a lot of this stuff.
"I took the task to heart, eating more shaobing breakfasts".. product was good.
"Mrs. Guo, the middle-aged dynamo from Henan province, who worked the counter".. energetic sales force
"her husband, a tall quiet sort, pounded dough behind her in a cloud of flour and steam".. lots of production
"It was a 24-hour operation, if you counted the seven hours at night that they slung a bedsheet across the front window and bedded down on the counters".. dedicated ownership and hard working staff.
"tried not to look at all the people walking by".. busy location
Cleary a business formula for success. Thats what makes the story odd. Me thinks the owner was saving face and not telling the whole story. Someone in the family could have been blowing the profits on back alley Mahjong. Who knows??
James G - April 21, 2009 12:59 PM
Gosh, does every highbrow foreign correspondent in Beijing live in the Hutongs? Anecdotal evidence seems to suggest so.
Hutongs seem to have become the high-ceiling brownstones of BJ.
zjin - April 21, 2009 1:42 PM
Agree with all above, also Evan mentioned that the other small businesses nearby seemed to do just well. So it should not be the big envoirement. I would guess lacking of capital and impatience.
Inst - April 21, 2009 1:43 PM
I'm told there's a cliche among overseas Chinese in major Western metropolises. Give a new Western restaurant 6 months to get its service up to grade, and give a new Chinese restaurant 6 months for its food to degrade. Whether this has any deeper meaning I don't know.
Inst - April 21, 2009 1:49 PM
Regarding the food quality, Evan Osnos mentions how he was looking forward to eating more shaobing than his "internist would allow". Perhaps it wasn't up to Chinese tastes? Although I don't understand what's the big deal about Shaobing; I've probably come down with Hepatitis or something, but anything oily now gives me a liver attack.
ScottLoar is right, it's not very scientific to extrapolate from a single data point.
Didion - April 22, 2009 3:13 AM
Sometime, I feel westerners care much about the old and dilapidated parts of China, rather than those modern, fashionate and colorful parts. Maybe you westerners find it is unique to you. But to Chinese, like me, it's quite normal.
Hutong, it is a combination of two Chinese letters, which means lane in old neighborhood. As far as I kown, in Beijing, many old living regions have been dismantled and new buildings are being build. So, as to some extent, Hutong becomes rare in big cities like Beijing, Shanghai, etc.
In Shanghai, the city I am living, I ofter seen small shops changing frequently. Maybe today selling shaobing, next week offering milk&tea, and several days after, it start to market socks or gloves. You may say this is impatience, this is not the way to become successful. But we can also say this is flexible, this is economical for finding the real source of profit.
Usually, the change or shift will continue untill the owner find the business that can really make money.
Gerry - April 23, 2009 10:15 AM
To answer Dan's question of "does it show that it takes more than eight weeks for a business to garner a reputation and to thrive?", I think branding or reputation are just not what these husband-and-wife foodstands (operated mostly by migrant families) in Beijing have in minds.
Some conjectures on why they chose to retreat:
1. the RMB 1000-plus rent is way too much for them. How many shaobings did they have to sale to come up with the rent payment? With such high rent it's hardly possible for them to save any money.
The woman mentioned all bicycle riders and few walkers as a reason for poor business. I don't believe this will do anything good or anything bad to the business. Come on, it's a hutong!
2. The couple most likely only focused on limited product offering, Lao Beijing Shaobing or Traditional Beijing Shaobing. I seriously doubt they could survive, much less thrive, on only Shaobing even they decide to move a better locations.
The one Shaobing shop in the hutong where I live at enjoys good businesses: not only their shaobings are the best, but also their palatable meatball soup and snacks for breakfast menu and all sorts of tasty stuffs they made. People living faraway even come to eat here across the city. On bicycles of course.
Evan - April 23, 2009 8:40 PM
My thanks to everyone for their thoughtful analysis. Overall, like many here, I considered some of the possible explanations, but I settled on the least profound of all: a single case is pretty thin batter (sorry) to sustain a larger hypothesis. I think of it as a snapshot. I'm a grateful consumer of so much micro/macro/cosmo-level economic analyis these days that, sometimes, I like to to do nothing more than look and scribble. On balance, however, the place probably lost the battle with other local joints over quality and reputation. There are a lot of unofficial laozihao on Mianhua Hutong, so they have an edge. (One block north is a venerable Hui-managed restaurant with well-regarded pastries.) Mrs. Guo had more pluck than clout. Thanks again.
Evan
Francis - April 24, 2009 10:24 PM
Could it be that they were operating without licenses and someone in the local Department decided to make an issue about it?
Or could it be that they were renting month to month and their landlord decided to increase the rates? That happened to one of my favorite places to eat in Beijing. It lasted a little over nine months. I was there on opening day and on closing.
When a landlord anywhere tries to milk a tenant and they lack a long-term "no rent increase" contract, I suppose things tend to end badly.
Any number of things could have happened. So many possibilities, as it was noted earlier, so that it makes it difficult to know what to take away from this.
To hazard a speculation; I see the development as a good argument for putting up the capital to lock oneself into a long-term lease if one knows the location will be profitable or a short-term one with an option.
Although I have mourned several chuar stands and restaurants; I am always happy to see the creative destruction in China's markets that is made possible by short-term leases and ever-changing business strategies. I suppose that such "destruction" makes for a healthy, evolving economy.
en yeni oyunlar - March 16, 2010 2:31 PM
Agree with all above, also Evan mentioned that the other small businesses nearby seemed to do just well. So it should not be the environment. I would guess it was lack of capital and impatience.