China´s middle class, not only the very rich, collected trillions in savings, hidden from the formal economy, argues the author Mario Cavolo in his bestseller. On his website he explains how the Wang´s saved their fortune by simply selling chicken on the street.
Meet Mr. & Mrs. Yang, they’ve been quietly, simply, diligently making a daily profit of 1000rmb/USD $165 per day five days a week for over a decade, not a dime of it reported to the government. Now wash, rinse, repeat millions of times along China’s merchant-lined streets to finally have an understanding of what’s really going on in China.
I first met the Yang’s in 2002 when I lived in the Jing An district of Shanghai and regularly stopped at their “hole in the wall” street spot to pick up a 10rmb/$1.50 order of their tasty “jiaoyan de” chicken tenders, tossed with fresh minced garlic, green onion and chili peppers. I moved away for several years and having a corporate client in the same neighborhood this year, I always stop by to pick up an order when I’m in the neighborhood.
Having a long time friendship and trust with them, I inquired in a friendly conversation with the Yang’s last week that went like this:
Mario: “So, Mrs. Yang, how many of these chicken tender orders are selling each day, 200 or more?”
Mrs. Yang: “At least…200 to 250 on average, sometimes 300.”
Mario: “Nice! Your cost is around 50%?…profit around 5rmb each?…that’s not bad.”
Mrs. Yang: “No, no, only 3rmb profit ($.50) per order, look at the other expenses, the gas, the oil, it adds up, and we don’t want to charge too much. And don’t forget we also sell these whole chickens at around 20rmb each, we sell 50/day and make 5rmb profit on those.”
So there you have it plain as day, right under your nose and every other cliche we might consider with respect to a China reality check. 250 x 3rmb = 750rmb plus 50 x 5rmb = 250rmb totaling 1000rmb per day profit. The funny thing is I sense that many of us perhaps were thinking that their total revenue per day was around that 1000rmb per day. Now, having done plenty of similar street side research in the past two years, their answer was right in line with what I expected. They are in fact taking in 3x more revenue and profit than most people might consider.
Keeping in mind this story has its start 12 years ago, one might begin to imagine how much money they have diligently accumulated over the years.
The China Weekly Hangout is expected to resume after Chinese New Year. Until that moment we use our scarce free moment to discuss how we can improve those online gatherings. Last week Paul Fox, Chao Pan, Dashan and Fons Tuinstra joined a first exchange on how the hangouts can be done better in 2014.