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Chinese innovate as inflation balloons

December 2, 2010

Asian currencies, oil, gold and stock markets all rose on positive manufacturing numbers from Asia and America yesterday. Signaling a bouncing back of the economy of sorts, the splurge in holiday shopping, and lower unemployment numbers, raised China’s PMI to 55.2 in November from 54.7 in October, according to the China Federation of Logistics and Purchasing. The HSBC China Manufacturing PMI rose to 55.3 in November, the highest since March, from 54.8 in October. India’s PMI for November, rose to 58.4 from 57.2 a month earlier. The Asian growth spurt was further boosted by South Korea, where the HSBC PMI surged to 50.23 from October’s 20-month low of 46.75, ending six months of contraction. Taiwanese manufacturing also expanded for the first time in four months, with the HSBC PMI rising to 51.7 from 48.6.

However, due to raising output, and more money flooding the markets, Asian economists are worried about inflation. Food prices have risen exponentially across the region and as supplies get scarce, countries are tightening monetary policies. Thailand raised interest rates yesterday, while India and China too are expected to raise interest rates early next year in order to curb demand-led food inflation.

Taking rising prices of food into their own hands, the Chinese have for sometime been indulging in Tuan gou, or group buying. Traditionally applied usually to houses, televisions and other white goods, Chinese women are now adopting the same concept to food. Benefitting both the supplier are well as the buyer, group buying ensures the supplier he gets a good price and sells all his vegetables / fruits, at the same time, it makes sure buyers get a discounted rate for buying in bulk. There are online methods where people bid as a group as well as offline group bargaining sessions where there are both sellers and buyers in a big room and a facilitator helps the group buyers to bring the price down.

take for example Mrs Xu, from Jindi Gelin town, Yizhuang district, Beijing, who told the Beijing Morning Post that she uses a group-buying web page to organise her purchases, with different members putting their orders up online. The Chongqing Evening News also reported that sellers at Nanping Zhengyang market are ambushed by groups of grannies on their way to their stalls. “After some bargaining, one group bought all of one seller’s vegetables, some 44 kg in total, and paid 160 yuan.” They then split the haul between them. Meanwhile, in Shenzhen, shoppers are even nipping across to Hong Kong, where apples are now cheaper than they are on the mainland.

As prices rise, supplies get depleted fast and distribution systems remain 18th century, Indians and Chinese are expected to innovate or to use the Indian term ‘Juggad’ to access food and other daily commodities. A common occurrence in Asia where we are used to recycling, reusing and innovating with products to improve their efficiency or make it more useful to us, Inchin Closer expects a lot more innovation in daily activities.

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