How China's state and consumer wallets relate - Shaun Rein

Shaun Rein

China is using its growing state power to put pressure on other countries and companies, but it is not only the government, argues business analyst Shaun Rein, author of The War for China's Wallet: Profiting from the New World Order. The government has become very sophisticated in using also the consumer wallets to put pressure on foreign brands and tourist destinations, he tells The Diplomat.

The Diplomat:

The book outlines two separate but parallel tools in China’s economic toolkit: China’s “State Wallet” (decisions taken directly by the government), and the wallets of Chinese consumers, guided by Chinese citizens’ preferences. How are these two interrelated? To what extent does the Chinese state ‘control’ Chinese consumers’ interest in (or lack thereof) foreign brands or tourist destinations?  

Many observers say that Chinese are inflamed by government propaganda and thus unsophisticated. The reality though is that everyday Chinese consumers do tend to feel the government is correct and that other nations, like South Korea in THAAD’s case, hurt the security of China. These consumers thus vote with their wallets by forgoing trips to unfriendly nations or boycotting their products. This happened to South Korea, as I showed in the book, and to specific brands like Lotte, Orion Cream Pies, and Amore Pacific Cosmetics.  

In fact, while the government often fans the flames initially, they very often try to calm the situation after a certain point when the general population starts to get too angry and might stop the government from being able to forge friendlier relations again. 

This happens every few years when China-Japanese tension rises. The government via the state media inflame passions, so Chinese start to protest. Eventually, the government tries to peter down the protesting by stopping people from demonstrating on the street or by censoring the most inflammatory posts on social media. 

Having the Chinese state and Chinese consumer wallets directed at you in anger in tandem is a tough force to go against for any government, let alone company.

More in the Diplomat.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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