Out of China: Big spenders learn to shop till they drop

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SHANGHAI - In the furniture department of Shanghai's No 1 Department Store, a 39-year-old woman was placing an order for a new dining-room table; black laminated wood with slightly garish inlaid gold and silver patterns.

'We have moved to a new place so I have bought new furniture. I have spent more than 10,000 yuan (pounds 835) on furniture in the past year. I earn a lot of money, I'm going to buy more - a big television, a vertical hi-fi unit,' she said, laughing. 'I have also spent more than 1,000 yuan on clothes for my son.'

The woman said she had her own business, in washing powder. Her earnings were irregular: one time she made 8,000 yuan in a week, another time only 1,000 yuan in a whole month. But her disposable income was substantial.

In the same store, a man with his wife and son were deciding about a 600-yuan music casette unit, with karaoke attachments. He worked in a soap factory and had saved a month's salary to buy the unit. The shop assistant said most people bought middle-priced items, paying about 2,500 yuan for a hi-fi system.

Many people's wallets are getting fatter, and the city has rediscovered the joys of shopping. Retail sales jumped 20 per cent last year, and foreign investment is pouring in to build retail outlets. On a Sunday afternoon one has to elbow one's way through the packed ground floor of No 1 Department Store.

Counters that in the mid-Eighties offered only drab, badly-made products are now bursting with colourful Chinese and imported goods. On 17 January, in the run-up to the Chinese New Year, the store set a sales record, with shoppers buying up more than 12m yuan of goods.

By night, Nanking Street, the main shopping thoroughfare, is a blaze of neon lights. The four-storey Shanghai Electronic Commercial Building offers all manner of electrical and electronic appliances. Down the road, Canon and Nikon display windows vie with luxury watch and jewellery stores. Brand names, such as Stefanel, Nike, Esprit and Sincere tempt shoppers. In nearby Jiujiang Street, chrome-fronted boutiques offer a range of leopard-skin patterned leggings. 'The lights are very bright along Nanking Road. So I didn't feel at all strange on the streets of Tokyo when I visited recently,' Mr Xu said.

But there is a lot about Shanghai's consumer boom that, at first glance, does not seem to add up. Where does all the money come from? With their love of statistics, the authorities will tell you the average per capita income for Shanghai province last year was 4,250 yuan, a 14 per cent increase on 1991. So who was the twentysomething Shanghai woman in Stefanel buying two sweaters for 900 yuan? And which parents are buying Benetton's junior ra-ra skirts for their eight-year-old daughters?

Far more revealing these days would be statistics showing the spread of incomes. The official figures probably vastly under-report average incomes, because moonlighting has become a way of life for those working for the state, in order to make ends meet; they also disguise how the opening up of the economy has quickly spawned huge differences in wealth in China.

A businessman offered his estimates. One-third of workers in Shanghai (including the rural districts) still earn a basic state salary, which might be as little as 200 yuan a month. Another third are probably working for joint venture companies with foreign partners or in newly set-up profitable businesses, earning maybe 600 to 1,000 yuan a month.

Then there are the private entrepreneurs and the wheeler-dealers, who have been the biggest earners during the economic reforms. Many now earn more than 1,000 yuan a month. Rags-to-riches tales of millionaires are the most popular newspaper reading, but it is the number of people earning private sector salaries who have transformed Shanghai's urban buying power.

Disposable income is high for many because Shanghai is still caught between the old and the new. Salaries are rising, while very cheap subsidised state housing is still widely available; official figures show China's urban residents paid just 1.1 yuan more for accommodation last year. Qualified young professionals who are earning reasonable salaries tend to live with their parents until they get married or in very spartan accommodation.

Shanghai's shoppers may be spending more, but they are also still saving. China has one of the highest savings ratios of any developing country. Bank deposits in Shanghai were up 12.5 per cent last year to 41.3bn yuan - a hefty 3,200 yuan for every man, woman and child. Other funds are invested by the city's active stock market players.