Paying Tribute: What Chinese New Year's Gift-Giving Tells Us About China

A helpful lubricant for human relations or national corruption racket? Either way, the so-called "gift economy," now in full swing as the Chinese New Year begins, is key to understanding social and economic interaction in China.

Luxury goods have become pawn shops' main business (paularps)

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By Shijian Zi
经济观察报E.O/Worldcrunch

BEIJING - Traffic in the capital is even worse than usual. Every corner of Beijing is full of people who need “to pay and be paid tribute to” for the Chinese New Year. It requires money, time and most of all: knowledge in the ways of power and influence.

The question of “when” to give the gift is a first clue to how this national custom works. It’s inappropriate to give New Year's gifts too early, which can make the recipient feel uncomfortable and obliged. Nor is it appropriate to send the presents too late. Since everybody is in the gift chain, when the recipient does not actually need or want the gift that has been given, he will need sufficient time to recycle it by passing it on to others.

What is perhaps most particular about Chinese gift-giving is that it’s often a one-way street. There is the less common exchanging of gifts, but most people give presents to someone to signal the future benefits they expect to be returned from the recipients.

Gifts have always been the most effective lubricant in human interaction. In both urban and rural settings, a gift is a means of developing one’s power and profiting in return. The hunger to consolidate power and wealth among the elite and the nouveaux riche has vastly expanded the high-end gift market.

Cash conversion

Kai Xin is the manager of a Beijing pawn shop. Three years ago, he graduated from the China Gem Science University where he specialized in gemstone identification. In the past, China’s pawn shops made profits mainly from real estate mortgages and micro-financing. Recently, luxury goods have rapidly become their main business. 

A Beijing newspaper recently conducted a survey of court cases for bribery. They found that small luxury items are ranked as the top choice for corrupting officials during the Chinese New Year, though cars and houses are also on the list. Antique shops, auction houses, pawn shops or even cigarette and alcohol retailers become the trading places for cashing in these presents. It is an open secret in China, that some refer to as the “gift economy.”

The busiest period of the pawn shops is thus right after the Spring Festival, i.e. the New Year holiday. All sorts of unneeded, unwanted and just plain valuable presents are taken to the shops for cash conversion. Since the price of gold has soared in the past two years, it has become once again the most popular and common item to turn in. “Among all luxury goods, watches remain the most common item, especially the famous Swiss ones like Vacheron Constantin, Rolex, Lange and Omega,” says Kai Xin.

Branded goods narrow the gap between the gift giver’s value judgment and the recipient’s recognition. Unlike tea or jade, they require less difficulty in professional identification. Bruno Lanna, a partner at Bain & Company pointed out last April when attending the “Top Brands Summit” in Shanghai that the gift giving custom is actually integral to the expanding luxury market in China. The expenditure on gift purchases makes up 25% of all Chinese consumption of luxury goods.

One wine merchant revealed to me, taking Wenzhou businessmen as an example, that most of what they buy is used in business banquets and gift giving. In China, actual individual wine collectors and enthusiasts are so few they can be ignored as a market segment. 

The Chinese way of wine gift-giving is particular too. The Grands Crus Classés of the top five Bordeaux chateaux are sent as a set, as are the six best vintages of Chateau Lafite.

In the past, China’s high-end brands' boutiques used to sell items that arrived much later than their counterparts in Europe or the U.S. This is no longer the case today. Flagship stores that boast of being the biggest in Asia update their new goods arrivals with accelerating speed, and are only slightly later than those in Europe or Hong Kong.

The African way

Gary is a project manager of a state-owned Chinese enterprise responsible for an African department. “Because of the Chinese presence in Africa, these unspoken rules of gift-giving customs are now spreading like a virus over there too,” he says.

There are two common ways of gift-giving to Africans. One is to give them business trips. These are reserved mostly for high-ranking policymakers. Their destination is always China. After touring them around, they are taken to shops selling electronics to choose whatever they fancy. The other kind of people who receive gifts are the ones who, though not necessarily occupying high positions, hold key jobs. Their feelings are usually very decisive as to whether or not the project goes smoothly. Every time Gary goes to Africa, he buys lots of laptops, digital cameras, cell phones, and even outmoded MP3 players. The airline Gary takes is always Ethiopian Airlines, because it allows 45 kilograms of baggage. 

Read the original article in Chinese

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