Service providers may be seen in China as ‘wimps,’ but they are better paid ‘wimps’
Real men “make stuff”. Until recently, this macho world view prevailed in China. It is not an accident Beijing’s government is dominated by engineers
For most of my life, there has been a prevailing view that “real men” don’t do services. Real men “make stuff”. They wear protective boots, and lumberjack shirts, and tinker on Saturdays under the hood of a sports car, or over a motorbike. From this world view, guys who do services are wimps. They are guys that can’t get real jobs. Or they are women.
Until recently, this macho world view prevailed in China too. It is not an accident that Beijing’s government is dominated by engineers. China’s “real men” build dams, or high speed trains, or melt steel. And they make “stuff” for the rest of the world to consume, from industrial chemicals to manhole covers.
As someone who has raised two daughters on the back of a life in services – as a journalist and more recently as a trade policy consultant – I find this prevailing view threatening and offensive. It is time to fight back – perhaps along with the 94 per cent of Hong Kong people who, as wimps or women, who also provide services.
Growth based on services ... delivers higher value, and higher incomes at the same time. No wonder China’s leaders have recently become such passionate advocates for services-based growth. We wimps may win the day yet
And it seems that at last China’s engineer-dominated government is beginning to discover the value of services. From about two years ago, Beijing officials began to acknowledge the importance of developing services if the economy as a whole was going to continue to grow strongly – and generate middle class incomes for families across the country.
By this year, services are claimed to account for 51 per cent of China’s GDP, up from 44 per cent in 2011. The government says that key drivers have been financial services, education services and health care services. I noticed last week that China is also set soon to become the world’s biggest movie market.
The Martian, from 21st Century Fox, opened in China last month with first-weekend box-office takings of US$50 million – compared with just over US$54 million in the US. The country added more than 1,000 cinemas and almost 5,400 screens this year – taking the national total to 23,600 . That is lower than 40,000 in the US, but growing at such a clip that it is soon expected to overtake the US. Entertainment services are clearly a good place to be.
I sense China’s officials first sniffed the importance of the “non-macho” services world in 2010 with the publication by the Tokyo-based ADB Institute of a study that broke down the value chain of an iPhone. At that point, there was great pride in the fact that Foxconn’s Dongguan factories produced literally all of the world’s iPhones.
But what the ADBI study showed was that out of the US$500 final retail value of an iPhone, just $7 of that value was earned or retained inside China. It was clear that China was at a very bad place in the iPhone value chain, and that the real money was being earned and retained in many services that sat elsewhere along the iPhone supply chain.