Berkley Center

In the first two weeks that I have lived in Beijing, I have seen many interesting sights. From babies defecating in public, to bicycle and taxi crashes, the most meaningful sights I have seen were in places of commerce. At its purest level, capitalism is thriving in this capital; more entrepreneurs wander the streets here, peddling nearly identical products right across the street from each other. Many of the assumptions underpinning perfect competition hold in many of the markets of Beijing: homogeneous products, with many buyers and sellers and near-perfect information. It is, for me, a sight that I assumed only existed in theory, and never in practice.

Never before have I felt that the only way to escape bodily harm was to purchase the peddler's’ product, yet on my first visit to the Silk Market——one of the many markets selling inexpensive American products——I was assaulted verbally and physically, almost to the breaking point. I went with the intention of buying some Nikes. As I arrived from the basement subway stop, I found my way up to the floor that housed footwear and bags. As I made my way to the first stall, I asked for a pair of Nikes and its price; it was well overpriced. Eventually, I bargained the price down to a reasonable number. Next, however, I went to the stall next to the first one, and asked for the exact same pair of Nikes, but because I had already bargained with the first shopkeeper—which this second shopkeeper knew—his starting price was lower than the first shopkeeper's last price. The second guy had simply undercut his competition. I played these shopkeepers off of each other, pushing both to their lowest price. Eventually, the original shopkeeper gave me the lowest price, and I bought my Nikes from him. For maybe 30 minutes of bargaining, the original stall owner had made a small profit, and he was working hard to gain my business. In fact, he was putting more effort in than any American salesman I have ever seen.

I think, however, the most interesting part this experience was what happened after the sale. I took my shoe bag and began to walk away, and as I did, the two stall owners began talking in a friendly manner—the fact that I had just played them off each other to my benefit did not affect their relationship. The best salesman had made the sale. This struck me because in America, I have seen sellers outbid each other, but the loser is often jealous of, even mad at, the winner, as though the sale had been stolen out from under them. Just look at the intense rivalry between major corporations with very similar products in America (McDonald’s vs. Burger King, Coke vs. Pepsi): the loser always has an intense hatred of the winner. Here, that was not the case. These men were friends first and competitors second.

This culture of cutthroat, rational business should be very similar to that of America, but it is not; it is quite different. It is for this reason that China has such great potential (among many other reasons). China has a culture that can be completely rational, deciding to buy or sell simply on price and quality. In other places, this competition day in and day out to “make the sale” wears people down and causes serious economic costs to the salesman (principally, they begin to dislike the stress associated with their job). Theoretically, this should cause them to either raise prices or find a new job. In China, this relationship between competitors of pure rationality, with no resentment harbored after the sale, will surely reduce stress to some extent (a large extent, in my opinion), which makes these jobs more bearable, thus keeping the economic costs to the salesmen low, which allows the price to remain low. In this sense, the system is supremely efficient.