Money Speaks6 min read

Mike Cormack reviews The War For China’s Wallet by Shaun Rein


Written by a businessman rather than an academic or economist, The War For China’s Wallet looks at China’s use of its economic power and huge consumer market for political and strategic goals. The author, Shaun Rein, is the founder and managing director of China Market Research Group, and the author of The End of Cheap China and The End of Copycat China. His previous books have proved highly prescient, outlining incipient economic trends and their consequences at a time when proclaiming them seemed bold, if not foolhardy. The War For China’s Wallet takes a broader perspective, delineating China’s efforts to use its power over consumer spending for its own purposes. It isn’t quite the political analysis of trade and consumption you might hope for, more a catalogue of the effects of the rising Chinese consumption on foreign countries and corporations, and the best way for them to handle them. As such, it’s really more of a tour around the scene than a comprehensive dissection of the topic, though not without numerous practical insights and observations, looking at the effects of Chinese consumer power and suggesting how it might best be managed.

Rein relates stories of how the Chinese government works to manage that rising power, for example pressurising South Korea over its deployment of the THAAD anti-ballistic missile defence system (developed in the US), through sanctions great and small such as “blocking K-Pop and South Korean movie stars from touring China,” “replac[ing] a Korean, Kim Jiyoung, as the lead role in a performance of Swan Lake,” and state media calling for “Chinese society [to] coordinate voluntarily in expanding restrictions on South Korean cultural goods and entertainment exports to China, and block them when necessary.” Sales of Hyundai and Kia cars, and Amore Pacific cosmetics, plummeted, and 87 of the supermarket Lotte’s 99 retail outlets across China were “shut down by officials citing fire code infractions.”

Similar repercussions were felt by Japan when its government bought the Diaoyu/Senkaku islands from a private owner in 2012, and to Norway when the Nobel Committee (appointed by the Norwegian parliament) awarded Liu Xiaobo the Nobel Peace Prize in 2010. Likewise, by mobilising its domestic and even overseas population, Beijing can have a great effect on its trade with other nations, and even pretend that such behaviour was not Party or government instigated. Although no-one is fooled, the coherence – or concealed organisation – of Chinese society gives these efforts immense power. Rein also notes the carrots China dispenses, as in the $7.2 billion of deals with Malaysia and the $5 billion loan facility for Indonesia signed up for at the May 2017 One Belt, One Road conference in Beijing. Rein notes that Singapore was not invited to attend, on account of its disputing Chinese moves in the South China Sea and buying weapons from Taiwan.

Rein’s description of this relatively new methodology in international relations is certainly perceptive. At times, perhaps through infelicitous language, perhaps through taking the perspective of Zhongnanhai, he can seem to be placing the onus on other nations to conform to Chinese expectations. For instance, he says “As a result of its actions, Singapore has lost billions of dollars in potential deals with China, its largest trade partner.” Another way to put this would be that China is using its economic heft for strategic goals. Discussing a rising nation’s new powers is often coloured by the fact that traditional powers have largely formalized their equivalent arrangements. German influence in the EU is baked in, as is US power in Latin America. Chinese reach is however new, experimental, and evolving. These events may make other countries uncomfortable as they note Chinese power rising, and their former dispensations shifting. But the simple fact is that the events are occurring because Beijing has the power to make something of them. The Marriott International hotel chain was forced to make an obsequious statement after listing Tibet, Taiwan, Macau and Hong Kong as “countries” in a customer survey, saying it “respects the sovereignty and territorial integrity of China.” This enforced kowtowing may seem distasteful to the outside observer, who might not be sure why a hotel chain’s opinions on Chinese sovereignty are of the slightest relevance. But the Chinese government is clearly seeking to leverage slights and harness the strength of its consumers, and Rein is one of the first to document this.

There might be another way of looking at it. As a businessman, Rein’s skill is in developing and managing systems, and removing bottlenecks hindering his firm’s output. But diplomacy and international relations have a different goal: they aim to increase the scope of government actions. They want power. Though diplomatic-speak often emphasises “win-win” outcomes and “mutual benefits”, more often it’s a zero-sum field. The less power you have, the more power I have. My clout inhibits yours. Rein ignores how US military power facilitates trade as much as it generally enforces the peace. This is not to say that US power is always benevolent, but a hegemonic state generally profits from peace and will go to some lengths to foster it.

Rein writes, “Until America reduces its military presence in Asia, especially in South Korea, it will continue to be looked upon by the Chinese as a long-term threat.” That is a typical opinion, seeing the US presence in Asia as a block to increased trading. But it’s also naïve. Were the US chased out of Asia, Chinese protectionism would probably be more likely rather than less. US power helps enforce WTO standards. A determination to pacify competitors in order to ease trade might cede more influence and more sway than Rein realises.

Rein’s expertise is the Chinese consumer, and The War For China’s Wallet is rich with tidbits on how to cater to this demographic, especially in the chapters on ‘The New Global Chinatowns’ and ‘Chinese Tourism.’ But that isn’t really what we want from a book like this. The first few chapters directly address the thesis of Beijing’s strategic efforts to utilise its consumer power, but the remainder feel more like a survey of current business issues for Chinese customers. Rein concludes each of his chapters by interviewing someone related to that chapter’s theme, but the interviews are hit and miss, and his questions are scattergun, with little strategic purpose.

The War For China’s Wallet will get points for being the first mover in a new field, but it is perhaps too hasty in failing to really flesh-out its analysis of Beijing’s strategic efforts. While Rein has insight in some areas, his intelligence shines most clearly in commercial areas, making the book an ultimately unsatisfying attempt to branch out into newer territories. The effects and manipulation of Chinese consumer power will no doubt be a hotly contested area, in publishing as elsewhere. Here, for the time at least, Rein has planted his flag. ∎

Shaun Rein, The War For China’s Wallet: Profiting from the New World Order (De G Pr, December 2017)
Header image: A Chinese “money-bell” good-luck charm, from Wikimedia Commons.