Dear Mrs. Yan

Shanghai, March, 2011. Mrs. Yan is a local street vendor selling fried egg wraps from her portable cart for breakfast in our neighborhood in Shanghai. As you’re about to find out Mrs. Yan kicks ass. And in the process of enjoying the story, you will much more clearly understand the rise of Asia led by China, its many implications and lessons for all of us.

Dear Mrs. Yan,

Do you recall that nice, local foreigner guy with the pregnant wife from northern China who came around to your street cart for one of your tasty egg wrap things this morning for breakfast? Yea, right, that tall, Italian-looking guy who talks more than most, that’s the one. Did you know that he is writing about you as part of his market analysis and commentary on the Sino-American socio-political and economic landscape across international media and investment advisory websites reaching across the entire planet discussing the most critical issues and trends impacting our increasingly, instantaneously, interconnected world? Hmm, didn’t think so. And you don’t understand why he would do that? That’s not a surprise either, so let’s find out why, dear Mrs. Yan,you’re the talk of the town.

Bringing the economic and societal issues of day across the globe down to earth, let’s make it real, make it human. And so, let’s start with eggs; specifically the egg wraps Mrs. Yan makes from her street cart every morning seven days a week from 6 to 9am at subway line #2, Century Park, on the Pudong side of the river in Shanghai. That way, we can understand with amazing clarity how and why it is that Chinese millionaires are heading to America with lots of cash in hand to buy and invest, a phenomenon I believe will have a significant impact on America’s societal and economic future.

We need to understand our world, each and every one of us who has concern for what is happening across the social and economic landscape, to understand the most important force in the world today; Asia rising meets dollar falling. Some might say that sounds a bit like a bad date. In the interest of valuable insights and enjoying a good read that will probably make you hungry for one of the 200 plus tasty fried egg wraps Mrs. Yan churns out each morning, here’s the account of what was otherwise a typical morning in the neighborhood, the morning I met Mrs. Yan.

As I was rolling still half asleep out of bed this morning, my predictably, picky, pregnant wife asked me to go out and get her one of those local egg wrapped in a crepe kind of things she likes from her favorite street vendor, Mrs. Yan. This is one of the few foods my wife enjoys eating these days with her taste and scent buds so out of whack, such things are not a myth for pregnant women. We live just a one minute stroll to the nearby subway line in a lovely, older local neighborhood on the southside of Century Park here in Pudong. It is a perfect urban Shanghai location. One minute’s walk to the city’s largest park, perfect for my running routine. Less than five minutes away is the Maglev high speed line, whisking us at 400km/hour to Pudong International airport in 12 minutes. Driving our car, we’re over the Nanpu Bridge and into the famed Puxi side of town in less than 15 minutes. Near perfect transportation convenience all from our quiet, local tree-lined neighborhood here in Shanghai, the most happening city in the world proclaimed a Time magazine cover a couple of years back. And that was before the World Expo 2010, which did far more for China’s international reputation than teach Disneyworld a thing or two about daily attendance records.

As the locals stream along the streets down to the subway, street vendors are out hustling with their portable breakfast carts; think New York hot dog stands, but far older and dirtier, with big, rusty crooked wheels. From our Western point of view, Mrs. Yan looks to you and me as a hard-working street person; frumpy, unkempt, worn down, little education. She is all of the above.

Mrs. Yan kicks ass and she’s been doing it every day for the past 15 years. She serves up 200 of her one minute fast, fresh, fried egg wrap things from her coal fired flat iron stove top on wheels every morning at 3rmb each, that’s US $.46 each. Her food cost, my wife and I calculated, is less than $.15. Mrs. Yan then repeats this feat in the afternoon, selling instead fried meat skewers, hot dogs, breads. A little calculating tells us that our dear, frumpy Mrs. Yan quietly earns around $120 per day seven days per week. Add it up; $3600/month CASH. She is far richer than most living in her 70sqm apt with her husband who probably had a salaried job as an engineer at $300/month for the past 20 years.

With typical local monthly living expenses around $600 or less, that means Mr. & Mrs. Yan have socked away $180,000 every five years for the past fifteen years totalling $540,000 not including interest.

Mrs. Yan hides her cart in the apt garden behind the gate at 9am. That’s when the police come on duty and might otherwise come and take her stuff because she is in fact, as many, an unlicensed vendor. In some places the police are more vigilant about preventing unlicensed businesses and street vendors, for the simple fact that they didn’t obtain the proper street vendor license and of course, don’t pay any taxes on their income That is reasonable, if the tax rates are reasonable, which they are. But in cities of 10-15 million people, this way of merchant street life thrives on.

Now, wash, rinse, repeat. MILLIONS of times every day across China and other emerging market countries where the merchant lifestyle is the root of the lower/middle class and invisible cash is king to the tune of untold trillions of dollars starting with Mrs. Yan’s cool half a million.

Now do you understand? Poor people with half a million. At least when you see them on the street, that’s what you assume; that they are poor people. Now you undertand they are simple people, but not poor people. Do you bother to seriously note reported GDP figures on China? Now you understand they don’t include an uncounted cash economy in the trillions. Local merchant style living is what American society went away from and spoiled. Plus, manufacturing went away, plus the banking shenanigans and bad governance that have pummelled the lifestyle of the lower and middle classes. So now what? Big trouble for America.

And in that big trouble will come some, note the word some, of Mrs. Yan’s cool half a million CASH, flowing into America. The trend is already in full force with typical Chinese tour groups spending and investing far more than any other foreign visitors to American shores, because she just wants to give herself and her children options – not perfect options, but reasonable options and choices. As we then raise the scale of this trend to the new, far richer Chinese people and companies who are also looking to spread their wealth, give themselves options, expand their investment opportunities across the globe, we suddenly see how the world works more clearly.

Let’s not forget the story starts with Mrs. Yan churning out $.40 egg wraps, like a little one woman frumpy factory day in and day out, keeping her mouth shut and doing her thing. Mrs. Yan is doing business illegally without a license, but at least she is not selling illegal goods. Along the same streets we find vendors selling bootleg DVD’s, CD’s, and books at $1.50 each. They can be viewed as good, hard-working entrepreneurs too, except those products cross the line into pirate goods, not tasty egg wraps.

China’s street vendors are pervasive. They shape and weave the fabric of the culture here, offering everything from fruit to barbecue, bootleg DVD’s, clothes and shoe-shines. For now, when you think of all the cash that more and more Chinese show up with to spend and invest on America’s shores now and in the coming years, think of Mrs. Yan’s, her street fresh, fried egg wraps, and her cool half a million, and all that the rise of Asia led by China implies for the rest of the world.

Mario Cavolo
Shanghai

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