What are the Chinese willing to pay for?

Do we value intangible wealth?

It has been my observation that the majority of Asians are quite willing to pay for material goods that represent wealth. Many (not all) however are reluctant to pay for quality services or intangible wealth, with the exception of paying for brand names and the prestige associated with them. I have seen this first hand among Indians, especially the newly rich in India.

Do you agree? What do you see around you?

Background:

With a historical background of poverty and hunger among the vast majority of the population, it is perhaps understandable that many Asians value tangible assets as representing wealth. Gold, land, material goods, and luxury goods are classic examples. People who acquire a lot of money are willing to pay, and pay a premium for these kinds of assets that they can see, feel and touch. People aspiring to be wealthy seek to acquire these kinds of assets. 

In the terminology of economics, these could be classified as goods. There is another element of wealth in economic theory - the intangibles. These are things you cannot usually see, touch or hold. They include services and intellectual properties (a fancy name for good, clever and useful ideas).  Services can be anything from someone taking your order and serving you a cup of coffee to someone giving you useful information, knowledge or advice - such as a doctor or a lawyer. We all NEED to pay for it. Often, we don't realise that the smile that comes with the service is also paid for. That is why the corporations in the USA are very strict with their employees on this issue. Many have been fired for not smiling. 

By the way, how much would you pay for a smile? Historically, some very wealthy millionaires have paid heavily for the smile from a waitress!!

One had better learn to pay for good knowledge, advice or information (a fancy term for a lot of gossip) too! It is big business these days and will be in the future.

These intangibles are also considered wealth in their own right. In fact, sometimes in the 80s, if I recollect correctly, there was a famous milestone marked in the USA - that the nation's GDP, for the first time had 'services' sector valued more than the 'goods' sector. It indicated a trend for the future. Today, the majority of the wealth, the world over, is in fact in intangibles - in services and intellectual properties. 

There is another kind of intangible that people usually pay for, often disguised under the title of intellectual property - a feeling of prestige and belonging to the elite. This is not strictly a product or service in itself.  This is usually linked to a tangible product or a service that people can either touch or feel or experience. Brandedgoods and luxury items are good examples of this. The actual goods or service would be just as useful without the brand name. Often we pay more for the brand name than for the value of the material goods or service itself.

I believe the vast majority of the wealth in the world today, especially in the more advanced economies, is intangible wealth in the services and intellectual property category. One needs to appreciate it more, and be willing to pay for these even in the process of accumulating more wealth for ourselves. It makes sense that we will value things we are willing to pay for.

The hype and brand name category is quite high up there too, in the scale of things, but I would not necessarily pay a lot for it myself.

What do you think? How do Chinese feel towards these different kinds of wealth of the future? What are they willing to pay for?

The original blog is: http://blog.chinadaily.com.cn/blog-1175065-27591.html