Personal finance thoughts from China


I'm in Shenzhen, China this week for work. Shenzhen is the one of the high tech meccas in China and it's pretty crazy to consider that there are over 10 million people living in this tiny city (I was told 20 million people when you add the surrounding area). During lunch and dinner each day, I have had the chance to talk to a number of co-workers on various topics. Since many of them have never traveled to North America, they are all very curious to know how we North Americans think about China. For me though, it has been fascinating to talk to them on topics related to money. Here are some of my traveling personal finance thoughts from China.


The result of having so many people in a small area means there are A LOT of high rise. In fact, the hotel I'm staying at is tallest building (61 floors) in the area - let's just say that staying on the 50th floor while rain and wind are pounding on the ceiling-to-floor windows and seeing lots thunders & lightening outside is an interesting (and somewhat scary) experience.

(Living large, or as some might call... roughing it)

(Great view from the hotel room)

You would think with high rise everywhere, the housing price would be somewhat reasonable.

Not the case in Shenzhen.

Over lunch one day we talked about housing price in Shenzhen. I mentioned to my co-workers that Vancouver housing price is insane and that new apartments in Vancouver are going for around $1,000 Canadian per sqft (or about 50,000 RMB/m2).

They looked at me and rolled their eyes.

They told me that on average, apartments go for about 70,000 RMB/m2, or about $1,400 Canadian per sqft!!!

That's the average price so new apartments can go A LOT higher.

No wonder so many Chinese people are heading to Canadian cities like Vancouver and Toronto to buy real estate!

Interestingly, my co-workers also mentioned that many workers in Shenzhen simply cannot afford buying apartments anymore. Many new graduates are forced to move to other cities because they can't afford living in Shenzhen with their low wages. Sadly, this is very similar to what we're experiencing in Vancouver as well.

Expensive Cars

Going around the city I saw a lot of expensive cars - Porsche, BMW, Audi, Lexus, and Mercedes-Benz. I even saw a few Lamborghini and Ferrari. Again, very similar to what you would see driving around in Vancouver.

"Most of these drivers are businessmen." A co-worker told me.
"They drive expensive cars so they can show off. They want to show their customers or business partners that they're well-established and they know how to negotiate price."
"It's an image thing."
"But who knows, maybe some of them are so deep in debt. We wouldn't know."

Interesting conclusion. 🙂

Does driving expensive car, wearing luxury brands, and having luxury items mean you are rich?

Probably not.


Talking to these co-workers, it seemed that people that invested early in the housing market are doing quite well. Those that could buy an apartment in the last few years also have done quite well.

"Co-worker A owns 2 apartments in Shenzhen."
"Co-worker B bought an apartment a year ago and now the price has more than doubled."
"Co-worker C, D, and E are multi-multi-millionaires!"

Interestingly enough, you wouldn't know these people are rich by simply looking at the way they dress. Image doesn't mean jack when it comes to net worth. 🙂

One of these "rich" co-workers I have gotten to know well over the last year or so. While talking to him, he told me that his wife cuts his hair and they don't own a car.

"Why drive and get stuck in the traffic when I can take the metro and walk?" (Traffic is absolutely terrible here, plus nobody obeys the traffic laws)
When I asked him why he's still working he answered...
"I like what I do at work. I have no stress because I don't need the money. I am just having fun. If I get fired today I can retire."

Wise wisdom of a rich & smart man who has already reached financial independence.

How much is enough?

When I asked why some of these people are still working, despite being multi-millionaires from the crazy housing market, I seem to get the same answer.

"They want to buy more houses/apartments."

It begs the question how much is enough.

Ok enough of my random traveling thoughts. Have you had any discussion about money when traveling in foreign countries?

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  • Reply
    The Green Swan
    July 14, 2016 at 7:13 am

    Interesting to hear the perspective from folks in China and also interesting to hear that it's not all that different than the U.S. Especially considering all the differences in culture and the fact China is still a developing nation. Thanks for sharing!

    • Reply
      July 15, 2016 at 4:26 am

      Hi The Green Swan,

      It was definitely interesting for me to find out that China isn't all that different than US or Canada when it comes to money. I suppose capitalism rules us all.

  • Reply
    Dividend Hustler
    July 14, 2016 at 7:14 am

    Thanks for sharing Tawcan.
    Crazy how expensive everything is now. It's nice that we own but it's depressing if we would like to invest and collect more assets.
    When do you stop though? I don't think I'd ever stop. I just love the grind and it's just a fun game.
    Have fun and keep up the great work. Cheers bro.

    • Reply
      July 15, 2016 at 4:27 am

      Hi dividend Hustler,

      It's a fun game to invest and make more money but for me once I have enough I wouldn't constantly think about making more money.

  • Reply
    Stefan - The Millennial Budget
    July 14, 2016 at 7:15 am

    Those were some pretty interesting conversations you had Tawcan. They remind me a lot about the book "The Millionaire Next Door". I think you said it perfectly, "Image doesn't mean jack when it comes to net worth." Social media is good and bad and unfortunately image means a lot on social media, at least to the millennials like myself who grew up thinking anybody with fancy cars and a big house are rich. It really shows the influence media can have on you.

    • Reply
      July 15, 2016 at 4:29 am

      Hi Stefan,

      I had more candidate conversations with these coworkers this time than last time I was in China. If you care so much about your image, all you'll accumulate are "nice looking" things. But are they really worth it? To me I don't think so. You're so correct regarding social media... too many of us want to create this image on social media to show off, so we buy expensive things to show off.

  • Reply
    July 14, 2016 at 7:49 am

    Great to hear about your trip to China. We visited for one week back in 2012. Not Shenzhen, though. I can confirm that traffic rules, if they exist, are not obeyed. Our host talked about car owners in Beijing having to stay off the road one day per week based on their license number. And to get a car license in the first place, you had to do an auction or lottery because the number of new licenses issued was limited.

    • Reply
      July 15, 2016 at 4:31 am

      Hi FerdiS,

      I went to Beijing shortly after the Olympic and thought driving was crazy there. On a 2 lane street you'll see 4 cars driving side-by-side. I've seen so many cars just decided to u-turn in middle of the street, completely ignoring the traffic.

  • Reply
    Mr. Tako @ Mr. Tako Escapes
    July 14, 2016 at 9:55 am

    I was hoping for some interesting new insights when I started reading, but it turns out China isn't all that different when it comes to finances afterall.

    It's quite crazy how expensive real estate is there. Any idea what kind of capital appreciation rates they've been seeing?

    I assume these Chinese real estate investors you mention base the value of those millions on capital appreciation. Do they derive any income from those properties?

    I once read that a huge percentage of condo's in downtown Vancouver were sitting vacant with the owners in China/Hong Kong.

    • Reply
      Jack Luo
      July 14, 2016 at 10:35 am

      Hi Mr.Tako,

      To the the best of my knowledge, the amount of capital appreciation rates on real estate varies quiet a bit, it could range from 10% to 100% (if not more). It really depends on the location of the property and the developments around it. It is not unheard of that someone made a 100% profit over a pre-sale property within 1-year.

      Owners renting out their properties are less common in China, especially in 2nd/3rd tier cities, many owners will usually sit on them and waiting for capital appreciation. Part of the reason being most residential properties are build bare-boned, which means additional interior renovations are required in order to rent them out. However, the cost of rent in 2nd/3rd tier cities are not high enough for most owners to make that investment, and the owners who have the money to purchase these properties usually don't rely on the rental income to pay off the mortgages. Hence, you'll see many vacant residential units in China.

      As of Downtown Vancouver, it really depends on the definition of "huge percentage". I cannot comment on the exact numbers, but I can tell you if the owners are indeed from China/Hong Kong, they will not likely to leave the units empty, as they want to make every penny out of their investments.

      • Reply
        July 15, 2016 at 4:43 am

        That's interesting about not renting out their properties. Didn't know that apartments are build bare-boned in China as well, that's certainly the case in Taiwan. So people end up having to spend quite a bit of money for renovation. Considering the real estate is appreciating so quick, it probably makes no sense to renovate and rent it out for a few short years.

        I suppose that's why we're seeing these vacant cities in China? Or that's simply a case of ultra fast developments?

        • Reply
          Jack Luo
          July 15, 2016 at 9:48 am

          Well, unlike Vancouver and Toronto, the real estate bubble is on the edge of bursting in China, and it's going to begin from the 2nd/3rd tier cities. Once again, to my limited knowledge about China, vacant cities in China, aka "ghost towns", are a result of many economic factors and poor development strategies. One being the vast and rapid urbanization policy from the central government.

          The government wants to "transform" the entire towns, districts and sometimes villages in rural areas, hence they will work with various developers to build these brand new cities, and usually people cannot move in until the entire project is finished. Ideally, with some great marketing campaigns, these properties would have been gradually sold during the pre-sale stage, which will be used for fueling the project. However, most people living in the rural areas are reluctant to buying into these so called "new cities", because it has no sense of community, and the social circles in their current residents are very valuable and important to them. (I see this phenomenon among my family members and friends back in China.)

          In addition to economic down turns in China for the past few years, not many people can afford to invest in real estate. As a result, without the capitals from pre-sale, many of these projects are delayed or put on-hold; some developers went bankrupt and no one wants to take over the project. As real estate developments have been extremely saturated in many part of China, even some of the "finished" cities are having hard time finding residents.

          Meanwhile, instead of experiencing economic adjustment like a free market would, the price of real estate is remaining solid. This is due to hefty government intervention in the game, who is scrambling to save the real estate and does not want the bubble to burst. In doing so, there were many new "eyes popping" policies been introduced recently, including an "urban migration encouragement" for the people from the countryside and villages in the mountains and valleys. The government will provide incentives for these poor people to leave their home town, and work with the banks to grant them "loose“ mortgage terms given they're buying a property in the cities.

          This policy sounds fantastic from the surface, but if you really think about the consequences, it's truly mind boggling. Imagine the US government trying to "move" people to the big urban cities from rural counties like Louisville, Kentucky or some other towns in Nebraska, then ask these people to take on a 20-25 year million dollar mortgage. The story will probably not end well. How are they going to survive in the urban cities? how can they even afford such mortgage?

          Another eyes-popping policy is the elimination of the "long-lasted" One-Child Policy, and in contrast, the government is now encouraging parents to have more children. This move out of desperation is supposed to stimulate the real estate market, as more people will ultimately means more homes are required, and most Chinese parents are willing to support their children getting their first home.

          Eliminating the one-child policy might not be a poor decision by the government, given I am the victim myself of the "generation single-child". However, having a single child have became such as a norm among the society, with the amount of stress and financial pressure for the young people these days, many couples are reluctant to have more than one child, if they decided to have any at all.

          The housing bubble is going to burst in China, just a question of when.

          • Tawcan
            July 18, 2016 at 10:41 am

            Wow very interesting insight Jack. Didn't realize that the housing bubble in China is about to burst.

            Good point about no social circles with the new developments. That's a huge purchasing factor for many Asians. People don't typically just move to a new place without having developed social circles already. That's one thing that a few of my co-workers mentioned too.

            Interesting connection between one child policy and stimulating the real estate market, never thought about that. You do have a point though.

    • Reply
      July 15, 2016 at 4:34 am

      Hi Mr. Tako,

      Sorry I wasn't able to give you some interesting new insights. I thought I'd get a different perspective while in China but from what I've heard, it's really not much different than US and Canada. You wouldn't be able to tell it's a communist country walking around.

      I didn't ask what kind of capital appreciation rate they're seeing but I wouldn't be surprised it's really really high. Yup, lots foreign investors are buying up Vancouver condos and houses. I think many of them are rented out...but some are just sitting vacant. The city of Vancouver is trying to do something about these. An empty house tax is being proposed. Not sure if that'll help cooling the ultra hot housing market or not though.

  • Reply
    Mr. SSC
    July 14, 2016 at 10:17 am

    I haven't had too many money conversations overseas, but I work with people from a lot different nationalities, and when we discuss money and investing it is interesting. For instance, a co-worker from Argentina appreciated me sending her links to Vanguard and Fidelity and explaining about index funds and mutual funds and the different fees associated with each - similar to the post I wrote about it. She was saying her and her husband are learning about investing now, because in Argentina "it's safer to just keep it in your mattress or a safe deposit box. No way you invest it, the government will just take it." Anyway, I appreciate a lot more I take for granted when discussing finances with co-workers.

    Another co-worker brought up the same issue you saw in China, where her husbands family always had nice cars even if the loans were 18% or more (ridiculous I know!) whereas her family drove older paid off cars and worked on them themselves because they didn't care about image. Surprisingly, or not, her family has a little higher net worth than her husbands, but not the "image" of rich. She is from Puerto Rico, so it sounds like that whole "image over debt" concept has supporters all over the globe. 🙂

    • Reply
      July 15, 2016 at 4:36 am

      Hi Mr. SSC,

      That's awesome you're able to help out your Argentinian co-worker by teaching her about index fund.

      Wow 18% loan? That's like buying a car with credit card and pay minimal payment each month. Crazy stuff!

      Isn't it amazing we're all very similar when it comes to personal finance?

  • Reply
    Jack Luo
    July 14, 2016 at 10:21 am

    I just came back from a visit to my hometown in China, and I am still impressed by how frugal most people's life are, especially the riches. A close family friend of ours, whom I called him "uncle", is a CEO of a publicly traded company in China, he's probably the most frugal person that I've ever met (besides my grandma, she's on a different level). When he was visiting us in Vancouver earlier this year, he would go out and get "complimentary" coffees from various places instead of making them at home or get them from the coffee shops.

    I think a lot of Chinese people's frugalness was a result of their harsh life back in the old days, especially the boomers, where the basic food and shelter were considered scarce. However, I almost had a culture shock when I visited Taiwan after. It was my third visit to this great place, but it was the first time that I really get to know the people's life there. I was surprised to find out that most people are generous and spendthrift with their money(in comparison to China), regardless of their financial situations.

    I couldn't grasp the concept at first, then I learned the amount of social securities that are available in Taiwan and the ridiculously low interest rate (1% for a line-of-credit account!!), it makes much more sense to me now. However, just like China, the real Taiwanese riches do not show off their wealth, in fact, the ones I met were all trying to act very "vulgarly".

    One thing that really surprises me is the amount of people who have reached true financial independence in both China and Taiwan. Like Tawcan's co-workers, many people have the ability to retire at such a young age (relative to North American standards). I believe that is something I need to dig deep and think about.

    • Reply
      July 15, 2016 at 4:41 am

      Hi Jack,

      Ah an insider's feedback. 🙂

      It's so true that some ultra rich people are ultra frugal. I think what you said about frugalness and harsh life is totally true. This is why my parents and their parents are ultra frugal as well. When you grow up in a financially harsh environment, you learn the value of money and try to conserve money as much as you can.

      Interesting point about Taiwan though. My extended families are in Taiwan and most of them are very frugal. I suppose it depends on who you meet and talk to. I personally don't think social security means it's easier for you to spend money. Look at Scandinavian countries. They have great social benefits but some people are quite frugal... but maybe not frugal like Chinese and Taiwanese people though. 🙂

  • Reply
    July 14, 2016 at 7:21 pm

    Thanks for taking the time and sharing from the other side of the world. It's always very interesting to hear other viewpoints.
    Wow they are paying C$1400 per sq ft -- no wonder they are buying real estate here in Canada and easily paying the high prices. Unfortunately in this global economy, we need to compete with foreign buyers to live here.


    • Reply
      July 15, 2016 at 4:44 am

      I knew real estate is expensive in Shenzhen but I didn't know it was that expensive. Thought it was about the same as Vancovuer but at $1400 per sqft that's a lot higher than Vancouver. It'll be interesting to hear what the price is like next time when I'm back in Shenzhen.

  • Reply
    July 15, 2016 at 6:01 am

    It's fascinating what is normal in different regions and how many frugal folks' lives are the same no matter the geography.

    • Reply
      July 18, 2016 at 10:38 am

      It's definitely interesting isn't it?

  • Reply
    July 15, 2016 at 3:39 pm

    One of my ex-coworker own a building in China. Looking at the way she dress, you wouldn't know she's a multimillionaire. However, she has NO, ABSOLUTELY NO plan to go back and live in China. She keeps owning the building there, renting it out. I guess, from her perspective, life in America is much better than in China.

    • Reply
      July 18, 2016 at 10:42 am

      I don't blame her for not wanting to go back and live in China. 🙂

  • Reply
    July 15, 2016 at 5:26 pm

    I visited Shenzhen back in 2001 as my brother was teaching English there. Back then it was CRAZY how far a dollar stretched. We'd eat at an upscale restaurant with the 4 of us (mother + 3 sons) for like $15 CAD (I think, it's been a while). There were 0 foreigners there too, so walking around everywhere invited stares and pointing and "lao wei! lao wei!" or "gweilo!" (foreigner). Kinda felt like a weird celebrity.

    About the car situation, although I don't drive an expensive car myself, I can totally believe that *some* people need it as part of their image. I've known people running their own businesses, and first impressions count, whether you agree they should or not. They've had to shell out for nicer cars just to show up in, just to help sell their image.

    As for what's enough? I have no idea, it's probably completely different from person to person. For me, it's the minimum to live the life I want, but I can believe for some it's like a video game score, the higher the better.

    • Reply
      July 18, 2016 at 10:44 am

      The price may have risen but it's still pretty cheap in Shenzhen compared to North America. If you're a foreigner (i.e. white or black) you definitely get a few look or two in Asia. Since I have Asian background, I don't get those looks walking around in China. 🙂

  • Reply
    Jayson @ Monster Piggy Bank
    July 16, 2016 at 3:39 am

    I was in Shanghai last month, and what I can say about the country is highly urbanized and people are so workaholic. People are mostly financially responsible like the people I met in one conference, they are investors!

    • Reply
      July 18, 2016 at 10:44 am

      Haven't been to Shanghai myself but from what I've heard it is one of the most urbanized cities in China.

  • Reply
    July 16, 2016 at 3:02 pm

    You mentioned about the millionaires working in China, but when I lived and worked in Vancouver back in 1997 through 1998 I found out that a lot of the workers on the production line and in the warehouse were millionaires. If you are wondering, back then a lot of people in Vancouver made a lot of money off real estate. July 1997 was when Hong Kong reverted back to Chinese rule and a few years leading up to the change many people in Hong Kong were buying properties outside because no one new how things would turn out so it drove up property prices in Vancouver back then and people who owned the land before then made a killing. I dated a girl in Toronto who was the product of this migration. Her father owned a few production facilities in Hong Kong and China and prior to 1997 he bought a house in Toronto and sent his wife and children here while he stayed in China to work and see what would happen when the Chinese government took over. After things settled out and the kids all finished university the mother and a couple of her older sisters moved back to Hong Kong, the rest stayed in Canada.

    • Reply
      July 18, 2016 at 10:46 am

      Yeah I recall there were A LOT of people from Hong Kong back in the 90's. Many of these people were quite well off. Many of them do end up moving back to Hong Kong once things settled.

  • Reply
    July 17, 2016 at 7:28 pm

    Hey Tawcan,

    Very interesting to read about and thanks for sharing about your trip. The Chinese are particularly addicted to Real Estate (whereas we have stocks and bonds too). I would heavily question the sustainability of those Chinese prices though, it wouldn't take much to send those prices back to where they were. Maybe.


    • Reply
      July 18, 2016 at 10:46 am

      Chinese people like "real" physical investments, hence for their love for real estate.

  • Reply
    July 19, 2016 at 7:38 pm

    The only time I remember talking about money while on vacation was on my Honeymoon with people from Australia. They had such a different view on everything with regards to work and "holiday" than we do.

    • Reply
      July 20, 2016 at 10:36 am

      Haven't been to Australia myself but have a few friends from there. They definitely have different view on everything with regards to work and holiday than we do here in North America.

      • Reply
        August 13, 2016 at 11:41 pm

        As an Austra-nadian I am curious if either of you could elaborate? I'm not sure what you mean.

        • Reply
          August 14, 2016 at 1:57 pm

          From what I can see Australians seem to take more vacations than North Americans. Many North Americans don't take their vacation time. Instead they get paid out for their unused vacation times.

          • Michael Fuller
            August 15, 2016 at 4:09 am

            Well Australians get 4 weeks holiday per year unlike North Americans – so naturally, they take more holidays. There's also mandatory Long Service Leave whereby if you work 10 years for the same employer you're obligated to take a 2 month paid holiday.

            Here it's also unheard of to get paid out for unused vacation time, unless you quit or get made redundant. I guess companies here recognise the health benefits of people having holidays.

            But there are plenty of people who work ridiculous hours, overtime, etc just to wear themselves down so they can earn more money. The trouble is, you don't run into these people when you're travelling – because they don't take holidays 😉

          • Tawcan
            August 15, 2016 at 1:22 pm

            That'd be nice to have mandatory Long Service Leave given that I just made the 10 year mark. 2 months paid holiday would be absolutely amazing.

            Unfortunately too many North Americans just work and don't take their vacations. This is on top of ridiculous hours and overtime too.

  • Reply
    August 13, 2016 at 11:39 pm

    Hey mate, thanks for sharing. I love hearing thoughts from regular Chinese people. And I was happy to hear they are still living frugally despite the nouveau riche status.

  • Reply
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