Time and money are at the top of the list for most business people. How much time is required and how much does it cost? The answers to these two questions will often be the deciding factors in whether or not a business deal is consummated. The Chinese perspective on this is a bit different however. Frequently, time is not the most important factor nor are the influences on the marketplace. Other considerations take precedence.
The Economist publishes an annual Big Mac index, which determines whether currencies are over or undervalued based on the price of the famous burger. This index thus provides a basis for directly comparing purchasing power parity. On April 29, 2000, their index had the average cost for a Big Mac in the US at $2.51 while in China, it was CY9.90 or US$1.20 (at 8.28:1).
Until recently, the average Chinese person might spend between 10-15% of the household income on essentials -- rent, food, clothing, heating, cooking fuel, electricity. In 1990, this would have been considered a high figure with a little as 2-5% required from the average person with little or no income tax required of state workers. By 1999, with the move to privatize and abolition of state subsidies for many workers, the demands on personal income for essentials are rising.
Americans pay more in taxes than many Chinese spend for essentials, on average 15%-25% of personal income, not total household income. Essentials, which often include some form of health insurance, may require anywhere from 60-90% or more of total household income. In the US, Americans must pay for everything and everything includes taxes.
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