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Book Review: Shaun Rein, “The End of Cheap China”

If I have to pick three books for Western readers that best explains modern China, I would recommend Shaun Rein‘s recently released book, “The End of Cheap China: Economic and Cultural Trends That Will Disrupt the World.” (Also, see my interview with the author earlier this year.) The book draws heavily on Rein’s personal experience working and living in China. During one of his early trips in China in the 90s, visiting Changchun, he recounts being propositioned by a beautiful prostitute. Over the years, he has noticed a gradual “uglification” of the prostitution pool. He attributes that to the general trend of economic expansion in China where women are increasingly finding better job opportunities.

Rein in fact recounts how Chinese women are becoming bread winners in many instances in Chinese society, and how their tastes are driving every-day consumption patterns in China. For Western companies, “The End of Cheap China” is indispensable. Some foreign banks have already purchased thousands of copies of his book as a requisite material for their employees.

The book is filled with many personal anecdotes. As the founding managing Director of The China Market Research Group, whose firm specializes in identifying trends in China for Fortune 500 firms, he is able to back his observations with survey data culled over the last decade. For example, Western media like to portray an imminent collapse of the housing market. He explained why that is unlikely. Unlike the recent subprime mortgage crisis in the U.S., the Chinese are required to put 30% as down-payment for their first home. In Shanghai, residents are limited to two homes where the second down-payment is set to 50%. Rein’s firm interviewed many homeowners and finds that they will not abandon their homes even if there is a significant percentage drop.

Of course, the bigger trend in China is one of pent-up demand as hundreds of millions of Chinese move into urban centers. (See my prior post on this topic.) In fact, the Chinese government’s latest 5-year plan stipulates creating 11 million more low-income housing units because demand has been so high!

Rein has access to all strata of Chinese society, including the ruling political elite. There, he is able to tap into his wife’s side of the family, who were personal friends with Zhou Enlai and Mao. He is able to peer into the relationship between every day Chinese and their local and central governments. The dynamics between the local and the central governments are crucial to understand, because they impact the success or failure of certain ventures, Rein’s book explains.

I also like his recount of the various problems he sees in China. For example, food safety. The melamine milk scandal created a buying spree in Hong Kong for imported baby formula. He himself had to make such trips.

In all, I enjoyed the book, because Rein does a masterful recount through his own eyes what is happening in China. He has a true front-row seat into Chinese society. That, in conjunction with the purpose of his firm to identify trends for their clients, there is really not many Westerner who is as uniquely situated to tell the China story.

  1. April 13th, 2012 at 18:19 | #1

    It’s rare to find such a perspective of someone that has so much experience working in China on the business climate there. I’m looking forward to reading his book.

  2. April 13th, 2012 at 23:36 | #2

    lol, I just realize my first paragraph may sound as if Rein has a lot of experience with prostitutes in China. That’s not it! As you read the book, he tells a story through the eyes of a visiting friend who noticed how open prostitution is in China. There is insight to the China that is today behind that phenomenon. The ‘uglification’ is publicly visible, especially if you have a mindset to look for what people are wearing, buying, and the like.

  3. April 16th, 2012 at 06:22 | #3

    LOL. Hope he got more than he bargained for such as AIDS.

    It is one of the major problems in China. The labor cost is more higher than before. A million or so workers in Foxconn get big raises and it will affect the rest of the labor wages. They have:

    * Control rising wages. Too high wages will cause the jobs going to other countries like Vietnam which has taken some jobs already.

    * Develop local market fast.

    * Move to higher value products.

    * Improve quality – making the last quick buck is short sighted.

    * Keep the one-child policy to reduce future no. of laborers.

    It should not take India or other low-wage countries to copy the model of China, but so far there are not too many successful stories.

  4. P.I
    April 16th, 2012 at 06:50 | #4

    I understand Shauns company licence scope doesnt allow it to conduct surveys, so assume any surveys he is doing are illegal, or someone else is actually conducting them. Interesting.

  5. April 17th, 2012 at 00:59 | #5

    While the book is titled “The End of Cheap China,” I think it is more about rising Chinese consumption and spending rather out of control costs in China.

    Beijing University professor FAN Gang wrote an interesting Op-Ed in China Daily almost two years ago about the rising labor cost in China:

    http://blog.hiddenharmonies.org/2010/09/fan-gang-rising-labor-cost-in-china-not-a-worry/

  6. Van Dooesner
    April 18th, 2012 at 02:51 | #6

    Chris Devonshire-Ellis also rated it on China Briefing today and gave it a good review. So did China Herald.
    http://www.china-briefing.com/news
    http://www.chinaherald.net
    I’m also going to buy it now.

  7. P.I..
    April 18th, 2012 at 08:27 | #7

    Can you please tell me why you deleted my last comment???

    Do you not want negative coverage of Rein and his book, or is it something else?

  8. April 18th, 2012 at 10:08 | #8

    @P.I..
    You shouldn’t use sexual reference in your comment!

  9. April 18th, 2012 at 18:48 | #9

    @Ray
    Likely the same porn troll. He has the habit of misquoting and wasting our bandwidth here.

  10. Jeremy Liu
    April 20th, 2012 at 08:23 | #10

    I found the book demeaning of both Chinese and China. From the constant references to prostitutes to the overall way Rein looks at us Chinese, I get a strong sense Rein thinks he is superior to us and that entitles him to review and critique everything about us. I did not like the book at all because of that and I completely understand why the Chinese government has banned it. It is insulting to us and I wish you would stop always talking it up. Did you even read it?

  11. Blackman Ray
    April 20th, 2012 at 08:38 | #11

    Dont worry, Rein thinks he is better than everybody, not just the Chinese.

    Man up, and stop being such a sook!

  12. April 20th, 2012 at 11:26 | #12

    @Jeremy Liu
    Don’t be ridiculous. The book doesn’t offer “constant references to prostitutes.” Corruption, food safety, pollution are very serious problems in China. The Chinese people as well the government have to confront those issues head on.

    Cite something from the book you actually think is demeaning to the Chinese or China.

  13. April 20th, 2012 at 11:27 | #13

    @Blackman Ray
    Cite something that lead you to think that.

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