1.4 Billion and Counting

June 5, 2017

I just returned from my first trip to China. I was there to explore and try to understand a culture both advanced and ancient, that has leapt forward over the last 20 years. I have had an affinity for China ever since I was in boarding school. There I got to know Chinese boys who were hard working, determined, disciplined, and ambitious. They were  keen to make money, and had both a willingness to make friendships and a tendency to stick together in their own cliques. From what we were able to observe over the last two weeks  I suspect many of these traits are still in evidence.

Our trip took us to Shanghai, Suzhou, Guilin, Ping’an, Xian and Beijing. Our guide for the first stage was a charming, well-spoken Chinese from Shanghai. We had a deep conversation on a two hour bus ride to Shanghai. I was impressed and moved by his story that is probably indicative of the ambition in many younger, educated Chinese. Our guide is 35 and married with one daughter. His father, a successful businessman in the construction industry died in 2008 after a ten year struggle with cancer during which time the business went down the drain.

Our guide has a philosophical and pragmatic approach to life. He works multiple jobs, including tour guide. He has invested in several businesses, and has accumulated four apartments in Shanghai. He does not believe in debt and has paid off all the mortgages. The apartments are worth around $1.5 million in total. He put the title for one in his mother-in-law’s name as she will ultimately leave it to his family and daughter. His mother lives in one, and he and his family live in another. The fourth is rented for $500 per month, a rent which is low because our guide likes the tenant and wants to be fair.  He needs no more than $100 per day to fulfill his and his family’s needs. He talked about the period of his life coming up soon when he will be caring for his mother, mother-in-law, and his daughter. He clearly has a deeply ingrained sense of family and responsibility.

His comments on investing were interesting. He stated that Chinese like to invest in tangible assets. They see real estate as the most secure asset to own long term. “Look” he said “in Shanghai in the last 10 years real estate has gone up 4 times! Where can I get that kind of return?” This differed from his views on stocks: “This is a new market. It is nothing more than a gambling table. Until we have a better sense it is too early to trust this market.” By contrast he felt more secure owning jewelry and gold.

He is not phased by short-term set backs. He thinks  in terms of multiple decades or generations. He is patient and thoughtful; hard working and disciplined. I suspect in a population approaching 1.4 billion there are many more like him!

Nick Hoffman