Chinese economic history as seen through eyeglasses

I recently got a new pair of glasses from an American optician, after almost two decades of buying my glasses in China. There was definitely some sticker shock on my part: it really drove home how the relative prices of customized labor-intensive goods can dramatically differ between a high-labor-cost economy and a lower-labor-cost economy. But it also made me think about all the various places in China I have bought glasses from over the years, and how they changed as the economy developed.

The first pair of glasses I bought in Beijing, probably somewhere around 1998-2000, was from a big state-owned store on the Wangfujing shopping street (it’s not there anymore of course, the redevelopment down there has left only a few landmarks untouched). It was classic SOE retail: massively overstaffed by lots of officious middle-aged employees in white jackets, who make you fill out paperwork in triplicate just to pay the bill. But it was well known and trusted–not perhaps to give you the absolute best deal, but to ensure some basic level of quality and not completely rip you off. While there’s not much state-owned retail around these days, consumer-facing SOEs still tend to trade on that higher level of trust.

In later years I was introduced to the wonders of the “glasses city” (眼镜城): massive buildings featuring floors and floors of nothing but opticians, who will measure your prescription and grind out your lenses in a few hours. On various occasions I went to two different ones, both in the Panjiayuan area. No licensing, no regulation, no safety standards (the haze of toxic fumes was worrying), but wow, overwhelming choice and unbelievable prices. The lack of barriers to entry was also apparent in the people running the stores too: rather than the local Beijingers who staffed the state outlets, they were often migrants from places like Fujian.

Here was a rare real-world example of almost-perfect competition. The tradeoff was almost exactly the opposite of the state store: low prices in exchange for low levels of trust. With hundreds of suppliers, doing any kind of systematic comparison shopping would take more time than it was worth–so it was normal to get a friend or relative to provide an introduction to a reliable shop.

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But eventually the shopping adventure in the glasses city started to get tiring, and I wanted something less random and exhausting. My wife was also encouraging me to get higher-quality glasses. For my last couple of pairs, I headed to local-brand chain retailers. While in the U.S. it seems like the high end of the eyewear market is occupied by independent opticians and chain stores cater more to budget shoppers, it’s the reverse in China: the independent operators are in the low-end glasses city, and the larger operations go after the higher-end market.

Still, the experience was a bit more like developed-world retail. Prices are higher, but (perceived) quality is also higher. Of course there is competition, but much effort goes into mitigating its effects, and on upselling the consumer with endless options and upgrades, all presented as backed by the latest technology and medical research. You come out with a pretty good pair of glasses, but also the feeling that you did not quite understand what you just bought and are not exactly sure why you paid what you did. But overall the model is not as medicalized as in the U.S., where opticians act as healthcare providers and “prescribe” glasses–trying to take advantage of the fact that you are not supposed to bargain over healthcare costs.

These three types of shopping experience do, in hindsight, seem to match up rather nicely with the different stages of China’s economic life: from the socialist 1970s, to the explosion of hyper-competitive small businesses in the 1980s and 1990s, to the more recent phase of consolidation and oligopoly and the rising importance of branding and fashion.

I do feel a bit nostalgic for the free-for-all of the glasses city. While it’s still there, I think it’s past its prime, as rising urban incomes mean that more and more of the population is probably making the same calculation I did: pay more in order to spend less time and get higher quality. And the next stage is clearly coming, though I haven’t bought glasses online yet in either country.

5 Comments

  1. This is absolutely fascinating. Back in the 90s, if I remember correctly, there seems to be a lot of such ‘cities’. I remember my first PC was assembled using different computer parts purchased from a ‘computer city’.

    Interesting Yiwu still uses this model, and one can argue that has passed its prime as well.

    Reply

  2. The description of “Glasses City” (tremendous variety, speedy service, good prices, …) seems inconsistent with the notion that China lacks sufficient domestic consumption. To whom are sales from glasses city or computer city being made, if not to the domestic consumer? What am I missing here?

    Could the lack of regulation and safety standards in consumer markets be the thing that is preventing their full development? I have personally witnessed the lack of financial regulation in China tremendously hinder the ability of China to realize its growth potential without taking on excessive debt. Could lack of adequate regulation be hindering the development of consumer markets?

    Reply

    1. I for one have never promoted the view that China lacks sufficient domestic consumption, so I don’t think you are missing anything.

      Reply

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