When I was a 16 year old, my uncle hired me part-time to help him out with his stone and tile installation contracting business. As a regular grunt, I was happy to get that $10/hour and couldn't wait to spend it every couple of weeks just after getting the cheque.
Eventually, I met the owner of the shop that gave the contracts out to businesses like my uncle's and found out that he rakes in millions of $s annually. Now, this elderly gentleman walked around in very worn-out gardener overalls, talked to everyone on site, got to know each one of us personally, offered help, ate with us and drove a beat-up 1980s Benz. He was the first millionaire I met and quite honestly a model for a humble businessman.
Both of the janitors in my high school (small town) were two of the most prominent businessmen in town. One was worth half a million from an HVAC business, the other had owned three stores, a bar and a bowling alley before retiring to the janitorial position.
The speech at our graduation was given by our janitor!
After grad school, my wife took a short-term minimum wage job in a thrift store. One of her coworkers, who had been there for years, was an older lady from India who (along with her husband) owned several houses and factories, after a life of thrift and savings and careful investment.
She sorted thrift store donations because she liked it.
Just curious, how did he end up spening all that money? Did he go on extended vacations? Did he eventually buy a large house? Was he just working mainly so his family, children, extended family could have a better life?
I guess I understand that saving and living frugaly is in generally something that is desirable, but what is the point of keep saving, if one is not really planning on using it. It then might as well be a number on a bank statement, or a wad of green paper under the mattrass. One can accumulate all that, then die from over-exhaustion from accumulating it, then it might as well never existed as far as that particular person is concerned, if they never really got to enjoy it (Now perhaps some derive a large enjoyment just from the process of accumulation and knowing they have access to large sums of money, it is just what makes them happy, but that sounds a little to strange to me).
Imagine you have more money that you will ever spend in your entire life. You've bought everything you want, go anywhere you want, etc. and still have billions left over.
Is this really any different from having a $1M in the bank, being perfectly happy, and not spending any of it? In both cases you have more than you need and you're happy.
For many people saving and living frugally isn't a means to an end, it is the end. It's how they like to live their life, and being able to do so while keeping the bills paid makes them blissfully happy. That there may be millions of unused $$$ in the bank is irrelevant to them.
I don't know how he spent his money, but he did have a great home and could afford to have his family live there comfortably. He hired quite a lot of his family members, and I remember some of them along with other workers made good salary.
What I gathered and what I heard from others that have been associated with this company, is that workers were happy and quality of work was above average for this type of industry. As a young lad, it showed me that the employee/employer dependance is a two way street, which is not always the case in many companies.
Thing that tied it all together seemed to be a good work ethic and not necessarily working harder to exhaustion.
Stress reduction. Imagine if his car broke down. What could be a major financial crisis for many would be a drop in the bucket for him. He could fix it and move on with his life.
Having more things leads to more potential points of failure and less means to repair things in the case of multiple failure. It's a balance for everyone but I suspect that possessions were less important to him than security/simplicity.
One reason to save money is to have enough to live off the interest when we are too old to work i.e. retirement. Usually, the plan is to not spend the capital in order to preserve the annual earnings from that capital. A couple million dollars in capital is what it takes to live a comfortable middle class retirement these days.
The first millionaire I met drove a beat up white Ford Pinto, and used it to pick up two bales of hay a week - for his prize-winning Arabian show horse.
From him I learned to be extravagant about my passions, and parsimonious with everything else.
I always admire rich men who do not live lavishly. There are more important things than shiny things, and it is heartening to see people who know that, regardless of which culture they come from.
And the sad truth is the majority of "shiny things" are sold to people living vastly beyond their means trying to pretend to live like these wealthy people.
I'd be extremely interested to see actual statistics on these things, if only they were available. Even more interesting would be to see how it breaks down brand by brand.
Frinstance I'm guessing that the majority of the watches made by certain well-marketed and expensive watch manufacturers (I shan't name any names lest someone glance at their own wrist and feel the need to make an impassioned defence) are bought by people who really can't afford to spend that much on a watch. On the other hand, there are watches in the same price range which are probably only getting bought by people who can afford them, and most of 'em are probably brands that most people have never even heard of.
I am right in front of me a pretty robust consumer survey (n=52,000) which indicates 63% of Rolexes bought in the US are bought by people with household income less than $100,000. Median HH income for a Rolex purchaser is $50-75K.
Most popular watch brands among HH inc >$100k are Timex, Fossil and Casio but the brands most disproportionately bought by these people, of the 17 brands in the survey, are Tag Heuer (51% of Tags are bought by $100k+), Movado and Swatch. Rolex comes in at #4
I actually did read that book (I bought it on sale, natch).
But the whole thing is seriously flawed, because all his statistics are based only on the small fraction of millionaires whom he actually interviewed, who are surely not a random sampling of all millionaires.
Watches are one of the items that spending money on isn't that bad of a splurge. Nice Rolexes hold value pretty well, and antique ones are collector items.
Not that I would ever buy a Rolex. Suunto's [1] are more my speed and are like having a mini-weather computer on your wrist (altimeter, barometer, compass). They are not $15 casio cheap, but way cheaper than anything like a Tag or Rolex and actually useful for my mountain climbing :)
It's not really unusual for the older generation to spend more conservatively, even when they're extraordinarily rich. USD/CNY is at 6.44 (or so), and $20 ~= 130 RMB. When I was in China, I easily survived on about 30-40 RMB/day... not because I couldn't afford it, but good tasting food is usually from the cheap street shops. I've had my share of golden-utensil $20,000 RMB meals, and they're nothing special in terms of taste.
I'm wondering if this is cultural traditionalism or personal dedication. On the other end of the spectrum, a lot of the Chinese have been trying to copy western capitalism in spending.
The tea comment is silly. Great Chinese teas are difficult to steep. My favorite kind of Oolong (category) tea for example, will taste disgusting if the steeping temperature of the water is off by even 10 degrees, or the steeping time is extended for even 3 seconds. Maybe he hasn't treated himself to good teas!
I do agree that the tea comment is silly. Saying you like to drink Lipton tea is like saying your favorite place to eat is Panda Express. To each his own, I suppose, but it sounds awfully silly to praise the imitation when you live in China.
You did catch my curiosity with this, though:
Great Chinese teas are difficult to steep. My favorite kind of Oolong (category) tea for example, will taste disgusting if the steeping temperature of the water is off by even 10 degrees, or the steeping time is extended for even 3 seconds.
Really!
I've had that experience with Japanese greens. My favorite (Kagoshima Sencha Yutaka Midori from o-cha.com) goes from sweet to bitter with about those tolerences -- three seconds and ten degrees.
The Chinese teas in general, and even oolongs in particular, though, I've found to be awfully forgiving. They seem pretty happy with approximately boiling water and 30 - 60 seconds on a first steep. I've actually found that to be sort of the charm of them; you can fly by the seat of your pants on the brewing, and wind up with a fair bit of variety in the product.
My favorites (with these characteristics) are Bai Hao ("Oriental Beauty") and teaspring.com's Wu Yi Yan Cha Bing. What are you drinking that's so touchy?
I've found Chinese Oolongs to be insanely easy to brew if you use a temperature controlled kettle and set a timer. English black teas are even easier. I had an Earl Grey last night that survived being forgotten for 10 minutes while I was chatting.
Side note: I've managed to duplicate the flavor of regular lipton by brewing Bai Hao for about an hour and then reheating it in a microwave. (I didn't brew it that long on purpose.)
Side note: I've managed to duplicate the flavor of regular lipton by brewing Bai Hao for about an hour and then reheating it in a microwave.
Hahaha! That sounds about right.
I've had your standard western tea product only a handful of times in the last few years. Each time I've come away surprised by how impotent and un-tea-like it was. It took me a couple of years to develop a taste for the flavors in good tea; I go back to the regular stuff, and find it surprising that all the subtlety is missing.
When you look at how it's made, the tea you get in the grocery store is analogous to hot dogs: broken pieces, leftover dust, dried out old bits with all of the potent oils and interest gone. If you're just lookin' for a meal, hot dogs will do ya, but don't let me hear you go comparing them to steak.
Though they do make some high quality tea bags these days. I've never seen them in a grocery store, though. Good tea bags have whole tea leaves in them, not dust. And a serious giveaway is that they're HUGE -- tea doesn't give you the right flavor if it doesn't have at least a coffee mug worth of space to unfurl in.
Side note: I've managed to duplicate the flavor of regular lipton by brewing Bai Hao for about an hour and then reheating it in a microwave. (I didn't brew it that long on purpose.)
The white tea? Wow.
Anyway, yes. A more fragile tea is probably a 5+ year aged raw puh-er, as a good example! I still can't brew mine properly. =(
I believe, though I don't speak chinese, that Bai Hao refers to the varietal, while the tea class has to do with when it's harvested and how it's processed.
Those teas are both really strong examples of the respective classes, but are otherwise totally different.
You're right: green teas are pretty easy to destroy as well - but I'm not a fan of green teas, so I don't have a very developed palette for those.
Unfortunately, I can't remember the name of the tea I'm drinking. It's at my desk at work, but I bought it from a tea shop, so it's not pre-packaged. I have the name written somewhere at home, though. When you steep some Oolongs incorrectly, the taste you get isn't as much bitter, as a (chinese word) sow taste. I don't know if that's a very good explanation, but I'm more accustom to drinking than explaining! This particular Oolong steeps for 24 seconds on a first steep (after wen ren shuan), and 22-23 on the second at calmed boiling.
My mother is originally from the Indian Subcontinent. She preferred Lipton as well.
I wouldn't say it compared well to some of the more interesting teas I've had in Tokyo (I love Oolong tea as well), but she was probably correct from the price - taste ratio.
Totally agree on your tea assessment, and I also greatly prefer Oolong tea. We'd only ever drink Oolong if we were in a teahouse or other formally prepared setting, as I can't recall a single we (me and my wife) made it successfully.
I've lived in China for nearly a year and completely agree with your budget, but I'm really curious about the 20,000RMB meals you've had. I'd say I've had quite a few meals with governmental officials and company board members, but nothing even close to that type of budget. Mind if I ask which city and/or what circumstances led to such an outing?
I was in Shanghai, and Tianjin. They were 12+ people or so, and a lot of the cost was attributed to alcohol and tea. An original Da Hong Pao, for example, will put you well over the 20k RMB mark, but restaurants won't serve it so you need to make special arrangements.
For the record, I'm Chinese and have tried Oolong Pu-erh, Ginseng, Green tea, etc. and still would opt for Lipton anyday. It has the best taste:convenience ratio.
You could say that this is not necessarily true, even though we all wish it was. There's an endless supply of people out there who work really really hard and yet they never become billionaires, in fact they might be living at poverty levels.
It's kind of a cool myth, but social mobility doesn't quite work that way.
I see two separate assertions : one, that hard work lifts you out of poverty. Two, handouts don't result in lasting changes in someone's economic status. I agree with you on the first. As for the second, that seems true enough: few welfare recipients have their lives transformed by the payments.
This is what normal people do. The real question is why certain wealthy people think they need to throw away the money that they extract from consumers and employees on things like cocaine, vacation houses and prostitutes.
I hope that people will do something more constructive with the resources they extract from others labor, that's all. Drugs and prostitution serve the purpose of transient sensory gratification, and do not build anything.
Of course, money is not real and it does not disappear when it is spent. What is real is the resources and labor extracted at the expense of others to provide and procure these services. Most likely, my examples could be improved and aren't worth discussing in particular.
I'm taking exception to lavish spending and resource allotment which does not even make the person spending the money happy, yet is done at the expense of others who have real needs that are going unmet. I do think an act like spending $200,000 on a bottle of wine at a restaurant just for the heck of it, while the purchaser might have hundreds of employees for whom 200k would be a life changing relief, can be seen as sociopathic.
The meme that capitalism is exploitation should be considered harmful. In market societies, money is (in general) not forcibly extracted and trade certainly doesn't happen (in general) at the expense of others.
I understand where you're coming from. It seems unfair. Don't worry though, plenty of cocaine and prostitutes are left for the proletariat. In fact I think average consumption is about even down the ladder. We no longer have to make do with religion.
Would it be any better if it was the result if their own labour rather than 'extracted from others'?
You are getting into an argument about how people should use the resources that they have been rewarded with. This is difficult, because reducing the rewards punish the responsible, and conditional rewards are difficult to implement if the sources of that reward are heterogeneous or disorganized, such as the consumers of mass-produced goods.
Not to say it can't be done, but it's not as simple as sprinkling magic social responsibility dust onto capitalism.
It is the fruits of their own labor. I agree this is a very large topic, and it's not really possible to discuss it here without spending all day composing.
It's more about personal responsibility and ethics than an economic system.
I think the rational motivation behind the common wisdom that coke and prostitutes = bad stems from the effects on regular people as an effective person hones his craft and becomes really good at pursuing c&p. Namely, he will be looking for more women to have sex with, better prostitutes, and possibly enticing women you care about into his lifestyle.
On the other hand, the humble, successful businessman simply becomes a better neighbor to all of us, and probably creates an environment where our loved ones stand to benefit.
Are you thinking of yourself as a human in the context of other humans? That's the perspective where this is rational.
If you're in a system with a bunch of humble rich guys, people will be forced to be thoughtful and conscientious. In a system of cocaine and no-value relationships, your daughter is seduced while you're nursing a hangover, and then you die of heart disease.
It isn't about stealing women, but rather creating a sustainable lifestyle where people grow and have a manageable environment.
It's not about my motivations - I'm commenting about the question the article asks. This guy should not be held up as abnormal in some way - people like Larry Ellison should. While quite common, obsession with material wealth and the drive to acquire it beyond reason is a perverse state, not healthy or natural.
People who make it their life's work to study human beings generally believe that humans are motivated by the drives to acquire, to bond, to defend, and to learn.
The drive to acquire is fundamental to all animals. Getting stuff is therefore one of the prime meanings of life.
I'm just curious and not out to cast aspersions on him because I liked that profile very much, but is $20/day more than most Chinese workers make? I have no idea, so am just asking.
The figure has varied fairly wildly over the last decade, so I think it would be hard to pin down an accurate number. The average seems to be about $100-200/month. I don't think that makes his actions any less humble though.
You should take note though that the focus here is on factory workers, whereas the average Chinese wage for all Chinese workers would be lower.
Actually, Hangzhou is a very rich city by Chinese standards due to their entrepreneurial culture. Despite "only" having 2 million inhabitants, LV sells the most items in Hangzhou compared to all other Chinese cities. Also, their more central streets are lined with luxury car shops.
$20/day does not seem too unreasonable for local Hangzhounese.
According to wikipedia, the city of Hangzhou, where his company is based, has per capita GDP of $14,972 USD. 14,972 / 12 / 20 = 62.83. A very rough figure, but gives some general idea.
"The two companies merged in 1991 after a fierce media campaign led by the employees of the canning company, who accused him of being a capitalist."
Well... it seems to have been a valid 'criticism'. Does anyone know if this sort of attack still happens in China? I'd be amused if it did at the very least.
"being a capitalist" is a catch-all accusation used when employers are trying to remove benefits from employees. It's the same as calling someone "greedy" in the west. There is still tons of protests and criticisms led by employees in China for better working conditions. Also, keep in mind that since the 50s the system took care of factory workers, from food and housing and even authorizing marriages! And then, out of a sudden the capitalist reforms came and they were all threw in this competitive market economy without any benefits. The term "being a capitalist" includes all these nuances and grievances.
Also, note that China today is NOT this extreme-capitalistic country that people think. The big enterprises (telecom, oil, etc...) are open and competitive, but most of the shares are actually owned by the government. In fact, when they describe "Capitalism with Chinese Characteristics" I believe it is not a buzzword (like many believe) but really a meaningful description. It seems that they actually created something different.
The last sentense caught my attention: "While Walmart and Carrefours are pulling out of Chinese operations, [...]"
Walmart and Carrefour "pulling out"??! Both are openening new stores at an amazing speed, undless that changed in the past year. Does anybody know more about this or have a link?
I read an article in the Economist, according to them Walmart is opening stores throughout Asia in accordance to Asian lifestyles. Carrefour, who was in the region first, is scaling back and selling off stores because they aren't as profitable as they thought. Part of this is corporate culture, Carrefour (big French company) wanted to run its business in the Carrefour way, all decisions are done in Europe. Walmart chose the franchise model, the store is designed and decorated like a giant chinese market, carries more local products (fruits, veg, meats, etc.) and buying decisions are made per store.
Thanks. I ll try to find it on the Economist site.
Living in China, I don't see much difference between Walmart and Carrefour supermarkets, both in decoration and in products, even compared with Chinese chains like Wu-Mei or Lianhua. They all have fresh meats (life frogs and turtles) and fish (a wall of water tanks with life fish), etc.
Perhaps he doesn't care about how much he consumes, but rather at how much he produces. It's not about what one is taking to the grave; it's about what one is leaving.
The guy's only 67 and actively involved in growing new businesses and philanthropy. Perhaps he sees personal extravagance as inefficient/no value and loves having as much financial leverage as possible to get done what he wants to get done.
Well, there are a couple different possibilities here. One would be for him to buy things for himself--this would shift consumption to luxury goods. Another would be to give them to his workers, which shifts consumption to everyday essentials (and, increasingly, middle class goods).
What he's done is shift money toward capital investment, which shifts consumption C from the present to (1+x)C consumption sometime in the future. I'm not sure that's a bad thing--it's all about the time discount rate you're using in evaluating the value of economic decisions.
Whose consumption is also relevant here, but a century from now the benefits of his forsaking consumption will be fairly diffused.
What would be admired? Buying a 100 foot yacht, 2 private jets, 3 vacation homes and a private brothel like many executives in the west? He can't take the money to the grave, so he should spend it all... on himself, frivolously?
Probably he is looking out for his family, or will donate a lot of money to charity.
I guess the point is that he doesn't care about the money. I don't think he's purposely denying himself things he could afford but doesn't buy so that he can add another 1000$ to his bank account.
If he didn't care about money then why wouldn't he distribute it to his employees in some sort of profit sharing? Noted he's a philanthropist, but he's also the 3rd richest so he's keeping a hell of a lot of the money. There's nothing noble here, just greed in a different form.
"My only exercise is doing market research... my only hobbies are smoking and drinking tea" -Extremely Unhealthy to boot. If you are a billionaire and still cannot afford the time to take care of your health, what is the point of working so hard?
Let us NOT hold this guy up as some sort of paragon of hard work to be emulated.
Sure, but is that not what this story is doing anyway? Holding the frugality of a rich man as a great virtue and writing an article is indeed judging him on one trait
I think that you can be interesting enough to be worth an article even though you may have some other weak trait. All of us have some.
In this specific case I can assure you that smoking is seen differently in various countries. For example when I visited the US I was astonished to see that smoking was prohibited near most buildings, etc, which is totally a good thing, it's just not like that everywhere else.
Eventually, I met the owner of the shop that gave the contracts out to businesses like my uncle's and found out that he rakes in millions of $s annually. Now, this elderly gentleman walked around in very worn-out gardener overalls, talked to everyone on site, got to know each one of us personally, offered help, ate with us and drove a beat-up 1980s Benz. He was the first millionaire I met and quite honestly a model for a humble businessman.
My saving habits changed soon after that.