April 2023 Shanghai Visit
Visited Shanghai - and Mainland - for the first time since January 2020 - ending the longest 'break' from continental China I have had in at least 15 years. The weather was perfect 20 degrees, skies were blue, and some old friends were still there, including the few foreigners who clang to their lives in the country through the pandemic. After all this time away, the biggest impression was that I haven't seen a more commercial and consumer-oriented city than today's Shanghai - which you'd think is a high bar when you call Hong Kong home.
Every roadside shopping gallery seemed bent on outdoing the one before with its building, signage and storefront designs, impeccably trimmed lawns and trees, fountains, statues, outdoor cafes and boardwalks; every store seemed to be an 'Experience store' or a Flagship store, with most audacious merchandise on floor-to-ceiling displays, as well as 3D screens, rotating mid-air platforms, drone shows and canopies of jungle vegetation occasionally misted by concealed auto-sprinklers.
Countless futuristic EV brands invite you into their cosmic steel-grey dealerships where you can scan a code and play around with every aspect of a car's look, while a coffee machine drips you a latte with your preferred vehicle model printed with ground cinnamon on the foam.
A gigantic Starbucks with a full-cycle bean roastery and packaging line resembles a national opera, complete with its own cavernous building, a stage, large stairs and an orchestra pit with dozens of fast-moving baristas. It looks as if it churns through enough customers daily to populate a mid-sized European city. Not far from it, a Gentle Monster concept store that looks like a massive modern arts gallery (of the more edgy type).
Street fashion statements: trenches, work boots, sparkles, tattoos, pets, exaggerated collar shirts, cosmic haircuts, skin-tight sports clothes, high-top custom sneakers. Every known bar and cafe format; every (Chinese) cuisine. Revving sports engines obediently trudging in slow-moving Saturday night lanes. Scan this, scan that, fill in here, pay with e-CNY, hire with a qr-code, get a discount for good credit rating, buy with one tap, get a coupon, speak with an AI-assistant, join an electronic queue, post this to the Little Red Book.
It's fascinating, buzzing, dazzling, fast-paced, indulgent and honestly quite incredible. A consumer utopia powered by data utilization and the pinnacle of China's internal consumption drive; the outcome of the past three decades of growth and enterpreneurship. All this activity also looks quite self-contained with foreign brands seemingly all onboard with Robert Iger's famous formula: 'Authentically Disney, distinctly Chinese', adding to almost complete lack of foreign faces in still early-reopening Shanghai. Got a bit of 'Fat Years' vibes from all this (a satirical fiction book by Chan Koonchung, about China's inward-looking consumer utopia future, most incredible in that it was published 14 years ago) and confirmed the intuition with a couple of local friends: short-term holidays abroad are still fun, but what reason one would ever have to live elsewhere? Lockdown scars seem to be healing well.
If true across wider subset, that would be great news for all China bulls out there. With it's own distinct inflation and monetary cycle, advantage in economy input costs, scores of domestic firms with unique world economy niches and know-hows, as well as relatively low share of financial assets in society's wealth, China is an attractive proposition as place to do both (consumer) business and financial investments. What muddles the waters is, of course, geopolitics, where things taking a wrong turn is definitely not impossible.
What matters though is that China is a risk distinct from other major regions, and one that it might be worthwhile to be exposed to, given how many investors cannot carry it now for non-investment reasons (sanctions and restriction lists, political optics, recent trauma of untimely exits at peak uncertainty moments, etc). China's role in the world economy is undoubtedly changing, but I feel one can tentatively hope that this economic introspection will not turn into erecting new financial, social or cultural barriers with the outside world.
Not everything here, of course, is dependent on China alone.
