The price of a One Country, Two Systems cup of coffee

Today, I went to buy a cup of coffee in a Hong Kong Starbucks. I tried to use a Shekou Starbucks “buy one get one free coupon”, which is valid in any Starbucks throughout Guangdong and Fujian. Nevertheless, the HK Starbucks did not accept my coupon because Shekou is in neidi (the interior). So I asked if Hong Kong was part of Guangdong — after all, the SAR speaks Cantonese and is justifiably proud of its Cantonese cuisine. The barista politely asked for my understanding because with respect to these kind of campaigns, Hong Kong is different from neidi and thus not part of Guangdong. However, when I asked if I could pay for my coffee using Chinese yuan, the answer was not only yes, but also that change would be given in Hong Kong dollars based on a one to one exchange rate. Thus, not only would I loose the exchange rate for the price of the coffee, but would be literally short-changed in the transaction.

Now, those of us who live in the Pearl River Delta are no doubt aware of the One Country, Two Systems policy, which in theory is designed to give Hong Kong, Macau, and Taiwan (at some imagined future date) a certain level of autonomy under a Mainland (Party) government. In practice, however, One Country, Two Systems is and integrated economic system, in which territorial identities create another site of unequal exchange. The most obvious example has been wage differentials between neidi and HK, Macau, and Taiwan. However, as the price of cup of coffee shows, at the level of everyday consumer consumption, these differentials also come into play because every small shop in the Delta has the potential to become a money changer.

In a related update to an earlier post on transferring Chinese yuan into accounts outside the country, a friend told me that the easiest way to get money out of China by way of Macau was to purchase chips in neidi and carry them across the border, play a while, and then exchange remaining chips for Hong Kong dollars.

10 thoughts on “The price of a One Country, Two Systems cup of coffee

  1. Things are not always what they seem.

    For example, your coffee coupon contretemps might cause you to conclude there is some political considerations why “neidi” coupons acceptable throughout Guangdong are unacceptable in Hong Kong. Another hurtful discrimination against cross-border visitors?

    Well, the more likely reason is that Starbucks China and Starbucks Hong Kong have different owners — Starbucks China belongs to the Starbucks Coffee Co (of Seattle) while Starbucks Hong Kong is owned by the Maxim’s Group.

    Different ownership and management would likely mean they do not coordinate their promotional programs, which is why a coupon issued by Starbucks China is worthless in Starbucks Hong Kong, and vice versa.

    So while we have one country two systems, Starbucks has one brand, two companies, and two systems for financial, management and ownership purposes.

    Confused?

    I suppose that from a branding perspective, the managements of both companies should endeavor to present a common face to the world (they share the same name after all so customers expect the company to be the same person), but they are two different entities, so the coupon experience you faced is probably unavoidable unless they have a sharing arrangement (mutual acknowledgment of coupons) which would require a legal agreement and management time and resources.

    I have nothing against Maxim’s Group – I love their eateries and especially the roast pork in the MX is quite good – but you might like to know that they are 50% owned by Dairy Farm, which is mostly owned by Jardine Matheson Holdings, whose roots go back to the illegal opium smuggling back in the old days when Hong Kong was ceded to England after the First Opium War. Much of the opium destroyed by Lin Zexu belonged to Jardines. Its founder and owner, Dr. William Jardine, was responsible for successfully lobbying the English government to wage war with China to promote his opium trade.

    Talk about encountering the foundational violence of colonialism — in a cup of frothy foaming espuma no less.

    Some links:
    http://news.starbucks.com/article_display.cfm?article_id=534
    http://en.wikipedia.org/wiki/Dairy_Farm_International_Holdings_Limited
    http://en.wikipedia.org/wiki/Jardine_Matheson
    http://en.wikipedia.org/wiki/History_of_Jardine,_Matheson_%26_Co.
    http://en.wikipedia.org/wiki/Jardine_Paper

    • Sigh. Thanks for tracking the corporate genealogy.

      For reminding us that we literally eat, digest and shit social inequality, one of my favorite books remains Sidney Mintz’s Sweetness and Power: The Place of Sugar in Modern History. Mintz reminds us that not only the colonized suffered through the emplacement of slave capitalism, but that the English working class also paid with their bodies because they began eating cheap and addictive refined sugar products, most commonly tea and cookies (or biscuits) to stay awake in the mines and factories. Thus, the ideological transformation of British imperialism occurred at afternoon tea (one of the tourist activities that attracts many, many Mainlanders, especially at places like the Peninsula HK and Raffles Singapore). Likewise, in the US we often find ourselves taking coffee breaks, fueled by South American coffee still sweetened with Puerto Rican and Philippine sugar.

      More personally, the food hospitality I have experienced over the New Year reveals a similar ideological transformation of the inequality of food production through pleasurable and social consumption. To end my reply on a more hopeful note — I have heard that farmer resistance to patented seeds continues in different neidi farmer markets, especially in Yunan, where many farmers belong to minority groups, rather than being Han Chinese.

      • Mary Ann

        THANK YOU for the reference to Mintz’s work — it sounds so interesting and I cannot wait to get a copy.

        I was very interested to read this in the Wikipedia entry on Sidney Mintz:

        “Mintz has compared slavery and forced labor across islands, time and colonial structures, as in Jamaica and Puerto Rico (Mintz 1959b); and addressed the question of differing colonial systems engendering differing degrees of cruelty, exploitation, and racism. The view of some historians and political leaders in the Caribbean and Latin America was that the Iberian colonies, with their tradition of Catholicism and sense of aesthetics, meant a more humane slavery; while north European colonies, with their individualizing Protestant religions, found it easier to exploit the slaves and to draw hard and fast social categories.”

        (This viewpoint is somewhat similar to the conclusion I was beginning to draw when comparing Portugal’s colonization of Macau (which was consummated by negotiation, accommodation, agreement and lease payments) and the British Empire’s colonization of Hong Kong (which was taken after violent destruction); and so Portugal’s form of colonization was more humane than England’s.)

        “But Mintz argued that the treatment of slaves had to do instead with the integration of the colony into the world economic system, the degree of control of the metropolis over the colony, and the intensity of exploitation of labor and land (Mintz, 1974a:59-81).”

        Very interesting and worth reading.

        I don’t have anything equally intellectually interesting to recommend in return, but I did listen to a hauntingly beautiful piece of music today which I hope you will like. By coincidence, the meditation that follows the music is an excerpt from a scriptural text that considers whether what one eats can defile a person and be evil in itself. It actually amplified on the points you touched on in your post about eating digesting and so forth. The synchronicity of such coincidences never fails to delight me. Here is the link:
        [audio src="http://www.pray-as-you-go.org/mp3/PAYG_120208.mp3" /]

      • Thank you for the link to the beautiful meditation; it was a refreshing way to begin work today.

        As I was preparing for fieldwork, a wonderful teacher told me that to do honest work, it was necessary to find one’s emotional energy. She said that some work best from anger and others from curiosity, still others from happiness. She maintained that if we ended up approaching our projects from an emotional response that didn’t work for us then our work would twist away from us simply because it did not nourish our intellect.

        I have found her insight continuously helpful, especially as I have realized that my work needs itself to be a form of meditation and compassionate engagement.

  2. On the exchange rate loss from taking change in HKD instead of CNY — definitely a loser from an exchange rate perspective, although probably acceptable as a matter of convenience.

    The exchange is a little like US travelers visiting Niagara Falls back in the day when the US Dollar was worth something, and getting change for my USD in Canadian coins. In places like New York City, I would frequently find Canadian coins which most retailers seemed to accept without question. These days Canadian currency is sometimes worth more than US, so it’s hard to see where one wins or loses.

    I have a taxi story – about 10 years ago, a taxi driver in HK complained to me that the previous passengers were mainlanders who claimed they only had yuan, and paid him in yuan (without adjusting the exchange rate) so he got ripped off. That was when 1 yuan was worth about 92 HK cents. He said that happened a lot with mainland visitors.

    Do mainland visitors continue to pull that stunt, I wonder? If they did, the taxi drivers would probably be happy about it.

    • Hi Perspectivehere, thanks for sharing upstate NY tourist and HK taxi driver stories. When I came to SZ in the mid 90s, it was still possible to find mom and pop money changers in highly public places, such as the SZU staff vegetable market and around the corner from the Municipal Police Station because many cross-border exchanges in Shenzhen were conducted in HK dollars.

      This time in Macau, taxi drivers took rmb and gave paper change in HK dollars, but coins were either patacas or HK dollars. Thus, when possible, I still prefer to change modest amounts with friends. Or, even better, we pick up the tab in Shenzhen and they pay in their home cities!

  3. While you are talking about exchange rates in the PRD, Macau has a nice thing going. Peg your currency to be 3% below Hong Kong’s–not enough of a difference for tourists to bother exchanging HK dollars for Patacas, but enough of a difference in aggregate for the government.

  4. From a quick search, I don’t have any statistics on how the government would benefit from it. But according to wikipedia: “Despite the fact that the pataca is the official currency of Macau, most of the money in circulation in the territory is actually Hong Kong dollars. Patacas accounted for only 29.9% of Macau’s money supply at the end of 1998.The exchange rate is pegged and is approximately MOP$103 for HK$100 as of February 2004.”

    Maybe the people that benefit the most are retailer-residents in Macau, as they can earn Hong Kong Dollars and spend at 3% less. Also, with only 30% of cash in Macau being patacas, maybe it is the three banks in Hong Kong that issue currency–and not Macau’s government–that benefits because issuing currency amounts to a no interest loan.

    http://en.wikipedia.org/wiki/Macanese_pataca

  5. Thanks for the info. Are the residents of Macau paid in HK dollars? Or is that the thirty percent that is paid in MOP? Thus, HK dollars entering the economy through individuals, rather than through official state organs.

    I’m increasingly fascinated by financial machinations, if for no other reason it seems to be a game that so many play… Looking forward to seeing you on Friday.

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