Overseas Purchasing Agency, A Trend of Student Buyers

December 15, 2014 by Meng Lu Leave a Comment

On November 30, 2014, Yang Gu, a Chinese student in California State University, Northridge, received a phone call from her cousin in China asking Gu to buy coach bags from the coach outlet store for her. When Gu headed to the retail store of Coach Factory in Citadel Outlet, Los Angeles, she found that the store was flooded with Chinese customers. Among them, except visitors coming to the U.S. for shopping, many are purchasers buying for others like Gu.

According to 2013 China eCommerce Market Analysis Report published by China Research Center, 40 percent shoppers purchasing overseas via purchasing agent is motived by cheaper than local pricing of luxury brands.

Coach outlet online store, coach factory.com, opens to the public for several days per month with much lower price than regular market price. Realized that the price of luxury goods is much cheaper abroad, sites like Coachfactory.com has been a popular online store for Chinese customers including Gu’s cuisine, Ming Zhu. This year the website closed Zhu’s account, because of her over purchasing history, according to Coach’s customer service.

To sustain ability to control the distribution and pricing of products, brands tend to manage the amount of products to be sold online. This year, some Chinese buyers with China’s IP or Chinese credit card payment methods were also blocked in the online store. To solve the problem, in Zhu’s case, a relative studying in the U.S. enables her to buy bags without extra expense, while more often, customers like Zhu seek for overseas purchasing agents as alternative with extra service fee. Gradualy, a hidden market of purchasing agents (called “Daigou” in Chinese pinyin) is emerging.

Purchasing agents shop for “commissions.” Most of time, this “commission” means price difference between original price and offering price. In a overseas purchasing site under Tmall (Alibaba), an Armani shoulder bag with original price at 250 Euro is charged for 3,300 RMB. With exchange rate of 1:9.3, each bag comes with 973RMB profit.

The scale overseas purchasing agency market is getting biger year to year, according to the 2013 Chinese E-Commerce Market Monitoring Report. In 2013 total transaction via overseas purchasing agent market is $12.30 billion, a 59 percent up from 2012. Analysts estimated that the scale would be doubled in 2014 to $24.84 billion. Popular goods are clothing, bags, cosmetics and beauty products, milk powder, and electronics.

Based on scale and motivation, purchasing agents can be divided into amateurs, specialists and masters. Masters and Specialists are the main focus of online discussion, for the mature purchasing model and a wider variety of brands and products. The common feature of masters and specialists is the fact that they purchase for profits. On the contrary, Amateurs are usually individuals who purchase more occasionally for friends out of goodwill. Students like Yang Gu are usually amateur purchasing agents, though, but these years saw a trend for students to be specialist or master buyers.

Screen Shot 2014-12-15 at 10.27.49 AM

Yolanda Zhong, studying public relations in the University of Southern California, earns $3,000 to $7,000 per month as an overseas purchasing agent.

She earns 8 to 15 percent of the original price, depending on the products. Usually, Zhong lists available products on Weibo, and waits for orders from Chinese customers.

Since calculating shipping fee is tricky, her offering price is often shipping fee included. In her words, “both size and weight count for shipping cost, thus it might be different to ship the same product if you use different boxes.” Therefore she has calculated an average shipping cost and adds it to the price.

Zhong’s parents don’t have a problem with her purchasing agency business. “As long as it doesn’t impact my study, they are very supportive.” Zhong said. “Indeed, it feels good to apply public relations knowledge to the real world.” Zhong said. “I constantly need to communicate with customer service of stores like Bloomingdales, Neiman Marcus, Nordstrom, Fifth Saks, and retailers like Juicy, Coach, Michael Kors. I learned how to ship, return, and negotiate with customer service.” She explained.

If packages are inspected through customs, “customers themselves need to take care of the tariffs.” Zhong said. For buyers like Zhong who only randomly accept order in spare time, customs inspection or package lost bring heavy losses, so tariffs and insurance are mostly at buyer’s expense.

Unlike part-time student buyers, Shanshan Hou has been a full-time purchasing agent after graduated from Cal State Northridge. To Hou, a tariff to be charged on one out of 20 packages is not a big deal to a big purchaser like her. Unlike Zhong, Hou has her own B2B sites on Taobao and Tmall (Alibaba), and has hired her own specialist buyers from all over the world to enlarge her overseas purchasing business. Right now, she receives more than 10 orders from taobao per day, and doesn’t charge for tariffs if inspected through customs. To her, enlarging customer base is more important, “ it is still profitable, as long as I have enough orders,” Hou said.

What’s All The Fuss About Vine?

December 3, 2014 by Meng Lu Leave a Comment

wechat_official_logo The newest version of WeChat, China’s biggest messaging communication service, brought a bringing a new video capture and sharing feature called Sight. Holding a button to a 6-second video clip and share, sounds familiar?- yes, it’s basically just Vine. 50d7e05aa6fe5d477e48a63047e38ce7_400x400

Already impacting the overseas market, Vine’s potential is undeniable. Kids with huge numbers of followers are a great medium to promote a product. Vine, as a simple video-sharing platform, is everything advertisers want.

Sixteen-year-old Lauren Giraldo has 2.8 million followers on her Vine account. Her fans love the six-second videos she posts on Vine, which show what she describes in her profile as “my random life.” The latest clips include her trip to Europe, dancing in a wired cloak, and attending concerts. Whether you like it or not, she has 2.8 million people following these abrupt snippets of her life. The account started as a hobby for her, but she now makes about $2,000 per sponsored vine by simply clicking on the “re-vine” button to share her sponsor’s video.

Vine’s parent company is Twitter. Twitter acquired Vine in October 2012 for $30 million in a move widely viewed as a counter to Facebook’s presence in the mobile messaging market. The easiest comparison to Vine is Facebook’s photo-sharing service, Instagram. Instagam stepped into Vine’s territory in December 2012 by launching similar video functionality with a 15-second length.

In terms of functionality, the biggest difference is that Instagram can share videos that are 15 seconds in length as compared to Vine’s six seconds. Instagram also retains many of its photo-sharing options for this new video-sharing functionality, such as filters, importing videos, image stabilization, save to camera roll, and so on. Vine, meanwhile, could not be simpler, with only a “save to camera roll” option.

Instagram users can share posts to Facebook, Twitter, Tumblr, Flickr, email, foursquare, etc., but Vine’s sharing platform is limited to Facebook and Twitter. This could be a reason that brands on Twitter refer to Instagram more than Vine. In a study looking at how often brands posted on Twitter using Instagram or Vine between November 2013 and February 2014, the statistics shows there are 4 times as many brand accounts using Instagram to advertise than Vine.

After Instagram’s short video service debuted last year, the company now offers two forms of content sharing. Vine still offers its signature 6-second videos, which, one could argue, is no longer as big a draw.

However, on June 7, 2013, four days after Android released a new version of Vine on its system. Vine reached the milestone of having more vines shared on Twitter than were Instagram pictures and videos combined. The user base is still growing, and, with its monetization trend, Vine could be Twitter’s best weapon for holding its valuation in the long term.

As simple it is, Vine seems more interested in giving creators a platform to make more interesting and creative moving imagery. In particular, content that is more “idea oriented.” The 6-second length can be viewed as a challenge, but it can also push users to squeeze only the most useful and important information into the video. In comparison, Instagram’s user base is more likely to document the details of their life no matter how seemingly trivial. The most-shared posts typically revolve around coffee, pets, family party, feet, hands, selfies, and other aspects of users’ daily lives.

Despite having fewer features than Instagram’s new service, Vine’s looping and embeddable function makes it easier to embed content to other websites, circumventing the limitations on sharable platforms to some degree.

Six seconds, looping, idea-oriented: these features are what advertisers are looking for. It mimics the powerful technique of sound-bite advertising, which is characterized by repeating a short phrase or sentence that captures the essence of a certain topic.

Vine, to some extent, achieves that effect. Instagram users upload pictures more than videos, and many users don’t watch videos on Instagram because they tend to take up more memory. Vine videos are very small — usually taking up only bytes. Without so many filters, playing in a loop, users might watch the GIF-like video multiple times, something marketers crave.

People often compare Vine to Instagram because they both offer short video sharing platforms. But in essence Vine is more like YouTube, a platform to share creative video content. The comparison is somewhat ridiculous, though, because there’s no way to put Vine’s 40 million active users into the same context as YouTube’s 1 billion active users per month.

Vine is now in its early stages of growth, but based on the speed at which the number of households with computers, tablets, or smartphones that can film videos is growing, Vine could reach YouTube’s scale much faster than YouTube did. With the now-rapid pace of adoption in the digitalization era, Vine was born in a good age.

The Economy of Pirated Content Views

December 2, 2014 by Meng Lu Leave a Comment

Despite a growth of legal channels for watching shows online, the volume of pirated content, pirated movies, TV shows, music, books and video games is growing rapidly. Pirated content viewers are largely condemned for stealing, as its assumed that they engage in copyright infringement. From a moral standpoint, it’s easy to argue that producing or viewing pirated content is disrespectful to the authors or brands that create it. But financially, do brands really make less money because of pirated content consumption? Morality aside, maybe that’s another story.

According to a study called “Sizing the Piracy Universe” from NetNames, both the number of internet users who regularly pirate content and the amount of bandwidth consumed from pirated content increased significantly between 2010 and 2013, and the internet-based infringement continues to grow at a rapid pace.

In history, companies and governments have never stopped trying to uproot piracy.

Many pirated content consumers use cyberlocker, a third-party file sharing service, to download and upload movies and music. In January 2012, the Hong Kong-based MegaUpload was closed and sites associated with Megaupload were shut down by the United State Department of Justice for copyright infringement. From 2011 to 2013, thanks to international law enforcement efforts, the number of cyberlocker use dropped 8%. Worldwide, even countries like China, which is notorious for culture copyright violations, also issued regulations trying to uproot pirated and unauthorized content and shut down several major peer-to-peer file distribution hubs, including VeryCD and BtChina.

However, in the US, bills like SOPA (Stop Online Piracy Act) and PIPA (Protect IP Act) died in Congress in 2012 after massive opposition (actually led by Google, with help from Wikipedia) in the name of protecting internet freedom.

There’s been several major pirate channels to open up to fill the demand.

For sites like YouTube, a hotbed for users to generate mash-ups (mix of copyright content by fair use) also have a blurred line in copyright infringement. And that’s another story in terms of whether the content is pirated or fair use. In addition, BitTorrent websites with its peer-to-peer distribution system still exist, survive and even thrive with never-decreased need for free content.

The Pirate Bay is a more infamous one. Established in 2001 by a Swedish anti-copyright organization and start web service in 2003, today’s Pirate Bay website provides access to all around the world.

The Pirate Bay was outlawed multiple times, once move the server to Netherland, and has been involved in as well as bring users many lawsuit cases in its history. For example, in 2009, Stockholm district court sentenced four founders of The Pirate Bay to one year in prison each and handed out a total of $3.6 million in fines. In 2006 the US government pressured the Swedish government and threatened to blacklist the Swedes within the World Trade Organization if Sweden did not deal with the website.

Legitimate services, including Netflix and Amazon.com, are affected by pirated content views. The financial loss results from customers turning to pirate websites for free content. Recently, a 27-year-old New York man was accused of uploading Ultimate Fighting Championship content to The Pirate Bay and Kickass Torrents which were worth more than $32.2 million. The man, Steven Messina, had uploaded 141 UFC presentations to those file-sharing sites under the name of “Secludedly,” and provided a PayPal donation link to keep his business.

The world seems to be showing little tolerance towards piracy. However, are brands like Netflix, Amazon, and even the UFC losing as much money from piracy as they claim?

Despite assumptions about how “bad” piracy can be, some argue that piracy loss can actually convert to revenue opportunities. According to a recent study conducted by Verance Corporation, an estimated 94% of American consumers viewing pirated movies are also buying legitimate copies of content. Namely, most of consumers in the US viewing pirated movies are actually “dual consumers.”

The survey identifies six distinct categories of consumers of pirated movies: “Occasionals” or “dual consumers” who prefer to watch legitimate copies but will view pirated content if possible, and “Convenience Streamers” who are mostly avid movie viewers with a preference for viewing via streaming. When subscription services fail and pirate channels are available, they will turn to the more convenient option.

There’s more. There’s the “No Big Deals” who see no harm to watch pirated content, but still willing to spend money for theater experience; “Content Enthusiasts” who tend to allocate a portion of their budgets to legitimate movies; “Cost Sensitives” who buy legitimate copies based on moral considerations; and “Library Builders” who collects both legitimate and pirated copies in order to build a collect that can be viewed through multiple devices.

In all categories, there are no individuals who strictly depend on pirated content and never pay for it. The study found that people “steal” not because they cannot afford legitimate copies, but because pirated content is convenient.

Although it can be considered immoral to view pirated content, from the perspective of copyright holders, including major and independent studios, content providers and content retailers, sometimes piracy loss actually can be converted to revenue opportunities.

Even if pirated content is illegal and immoral, it does not mean it translates into brands losing money. In a circuitous way, they might even get revenue opportunities out of this behavior. Then, is this one of the reasons brands turning a blind eye to pirated content consumption? Maybe yes, but don’t say it out loud.

Why Is RadioShacks Going Out of Business

November 25, 2014 by Meng Lu Leave a Comment

Thanksgiving like Christmas is usually the commerce-free holiday in the US, when big stores are mostly closed. But these years, there’s growing number of retailers expanding their selling hours during commerce-free holiday to boost their sales. Radio Shacks probably the most expected one.

Founded 1921 and went public in 1982, RadioShack Corporation is an American franchise of electronics retail stores in the U.S. The company has more than 4,400 company-operated stores in the U.S. and Mexico ,and more than 900 dealer stores in 25 countries.

It’s not surprising that the company is desperate to gain some sales during the holiday season, because there’s speculation that the company will die very soon. With several consecutive quarterly loss, in this June, following the horrible results posted from RadioShack’s 2014 Q1 earnings report on June 11, analyst company B. Riley & Co. lowered its price target on the company from $1 a share to zero, signaling another prediction for the company’s march to grave.

Compare its Q1 2014 and 2013 Q1 which is one year ago, Its revenue dropped $736.7 million from $849 million in the year ago period, which is about 11 percent drop. And Sales fell 14 percent for stores.

The company’s total liquidity decreased year to year, but its Chief Financial Officer John Feray assured investors that the liquidity they hold was enough to fund its turnaround for the next 12 months. (Ironically he already resigned)

First, to decrease expenses, RadioShack plans to reduce rent costs, cut customer compensation expenses, consolidate to fewer freight carriers to reduce rates, buy more store fixtures from Asia, and examine utility bills and rate plans. Like Office Depot, RadioShack plans to do more with less and shutter 200 stores per year over a three-year period.

However, take a look at the expense chart of RadioShack’s: Operating expenses, which were around 40% of revenue at the beginning of 2012, surpassed 50% during the most recent quarter. By comparison, Best Buy only spent 20.4% of its revenue on operating expenses during its second quarter.

Second, the company launched RadioShack Labs with PCH on June 5 to support startups and inventors to boost new product innovation. RadioShack plans to use a “direct-to-store” model for select products by reducing inventory requirements and increasing inventory turn in stores. The “RadioShack labs” is built to mainly stimulate innovation and raise consumer awareness to save its mounting losses in dropped sales. This could be an opportunity to fight against the industry-wide decline in electronics sales and low mobile phone demand due to few new models.

Other moves, such as adding services including in-store mobile device repair service to increase customer volume, are in the planning stages. The company’s Chief Executive Joseph Magnacca has acknowledged the implementation has taxed the company, saying “We were trying to do too much too quickly.” Magnacca, though, is confident that, once implemented, the moves will be a success. He added that the recent quarter report did not showcase their turnaround plan, and he was confident about that the company was able to overcome its challenges.

Till today, looking at RadioShack’s market performance it’s quite not pleasant. No one comes to RadioShack’s for purchasing electronics. One factor is that While consumers are increasingly shopping online, RadioShack has a negligible e-commerce business. Its rival Best Buy, in contrast, has invested in its e-commerce business over the past couple of years. RadioShack can’t compete with Best Buy, and it certainly can’t compete with online-only retailers such as Amazon.com. People aren’t going to RadioShack stores because there’s simply no reason for them to do so. And that’s not a problem that can easily be fixed.

To touraround they need to keep up bring more products, more innovation and establish a strong selling point. But these things need cash. Unfortunately the company don’t have liquidity, as mentioned before. Sales are declining far faster than costs, resulting in quarterly losses growing. The operating loss during the most recent quarter more than doubled of year ago period

The company shows no sign of increasing liquidity. So right now it is desperate for cash.

Recently RadioShack received a lifeline of a $120 million investment from shareholders hedge fund Standard General LP, which also finance American apparel to save the company earlier this year, and Litespeed Management LLC that will allow it to get through the holiday season and restructure its debt.

CNN Money first published the coming financial rounding from hedge fund August, RadioShack shares are up 115% for the week.

On October, it announced that it is planning a rights offering that is expected to complete by March 15, to offer existing shareholders the right to purchase equity at 40 cents per share of common stock.

Rise of Birth-tourism Industry in America

October 10, 2014 by Meng Lu Leave a Comment

On Oct. 7, Li Zhou and her husband were in Shanghai celebrating the 100th day since their baby boy was born. But the actual birth had taken place 6500 miles away from home, in PIH Health Hospital in Los Angeles.

At the same time, 28-year-old Panpan Li, who was two months pregnant, was nervously waiting for her U.S. tourism visa in Beijing. This soon-to-be Chinese mother hopes to give birth to her baby in Los Angles in 2015.

Sunshine, beach, sea, California has been one the most popular tourist cities in the US for a long time, but now, it’s attracting a different kind of tourist. The U.S. Constitution confers any newborn in this country citizenship of the U.S, and this law makes livable cities like Los Angeles and San Diego the paradise of birth-tourism. Thousands of pregnant women like Zhou and Li flock to America, hoping to bestow their children an unusual gift: the U.S. citizenship.

Los Angeles Chinese consulate is full of new-born-in-America babies and new mothers

Coming all the way from China, many soon-to-be Chinese mothers live in so-called “maternity hotels”, where are temporary homes for preparation of labor, most of which are private residential houses. To give birth in the U.S. is not much more expensive compared with Mainland China, but some expecting moms pay maternity hotels more than $30,000 for 3-month accommodation.

Wei Wei, an assistant in Reding Maternity Hotel located in San Diego, said the service price was from $25,000 to $35,000 for 30-week-stay before labor, based on room type and room size. According to Wei, Reding Maternity Hotel is a two-story villa in a quiet residential community near seaside. It has a courtyard in front and a backyard for pregnant women walking and chatting. Reding is able to accommodate four pregnant women right now, and more customers are expected in its newly renovated branch nearby.

The outside of Reding Maternity Hotel

Expecting mothers find maternity hotels listed on Chinese social media such as Weibo and forums such as Chineseinla.com, and the number of available such hotels is huge just on these forums. No statistics of the exact number, price, or profits of these hotels have been revealed. Yet no one knows how big the market is.

However, Chino Hills City Councilwoman Rossana Mitchell represents a grassroots organization called “Not In Chino Hills,” which seeks to drive out these maternity hotels in their community. She claimed that these hotels were illegal because they located in residential area. Clayton Dube, head of US- China Institute from University of Southern California, said the fact that maternity hotels were commercial businesses limited them to be only allowed in certain commercial zoning areas, which made it illegal if a maternity hotel was just a villa in a residential community. At the same time, the zoning issue leads to another question about whether those maternity hotels pay tax out of their incomes. Most maternity hotels inevitably become tax evaders because they are hidden in residential areas.

Residents in Chino Hills have been complaining about how these businesses disturb their life during the past two years. They said they saw pregnant Chinese women walking down the hill regularly and being taken to tourist destinations by bus now and then. They feared the constant coming and go visitors and cars would increase noise in the community.

Chino Hills residents held up signs that read “Not in Chino Hills” and “No Birth Tourism” at an intersection close to the “maternity hotel.”

Facing all the controversies towards childbirth tourism, however, the trend of US birth-tourism has not stopped. Since the U.S. allows individual tourism visa for Chinese residents less than a decade ago, the number of Chinese visitors is rising. According to Dube, right now, everyday on average 4,000 Chinese come to the United States, and the number is increasing. Most of them are not pregnant, but with the overall increase, birth tourism booms at the same time. Plus, since Hong Kong stops mainland pregnant women from giving birth there, more families in the Mainland are considering coming to the U.S. instead.

For parents travelling 6500 miles to the U.S., they have faith that U.S. citizenship worth this long trip and high cost. To many of them, it’s a lifetime decision planned for years, not just to follow the fashion.

35-year old Xiaoyi Hu and his 31- year-old wife got married two years ago. They made the decision to give birth to their baby in the US even before they got married, and they came to America to do some research on birth-tourism in their honeymoon. Born and raised in Beijing, Hu said Beijing’s living environment had been degrading year to year. “Beijing is not what it was like 10 years ago,” Hu said. Air pollution, expensive housing, inconvenient medical service, and government’s opaque system makes this long-time Beijing resident feel the second thought of the future of his child.

“I just want to give my kid an opportunity for his future. It’s up to my boy whether to come back or just stay in China when he grows up.” In Hu’s mind, he just bought his child a possible alternative, lowering possible barriers for the long run.

The goal of those parents who come all the way to America to give birth is surprisingly consistent- for the better education and life of their children. Panpan Li, who plans to give birth to her baby in Los Angeles is a primary school teacher in Beijing. Even though her child is not due for another eight months, she already is planning everything for the coming child. Li has made two plans. Plan A, she wants to let her child attend kindergarten and primary school in Mainland China, and go back to America from middle school. Plan B, her child will attend American schools from kindergarten with her companion. The latter plan requires her visa status, and she seems ready to be busy for her child for the rest of life. “It’s harmless to have an extra opportunity. Maybe my kid won’t keep the US citizenship in the future. But it is the best I can think of, so if I can, then I’ll do it for my child.” Li said.

To those parents, the expense of birth tourism is probably the cheapest way the bestow their children U.S. citizenship. Xiaoyi Hu thought it was actually a very good deal for the long run. In Hu’s opinion, spending $20,000 to buy a US citizenship is much cheaper and more convenient than applying for immigration in the US in the future. For example, Chinese EB-5 immigration visa required an investment of $500,000 in an American company. Although in EB-5’s case, investors might get back their money several years later, but the amount of “initial funding” is 10 times bigger. As a company’s middle manager in Beijing, Hu thinks he is not rich enough to get his child investment immigration, but a $20,000 worth equivalent investment is something he can give to his son.

As long as it’s still legitimized to obtain a U.S. passport if born in this land, in Hu’s mind, the market is not likely to diminish. Plus, from the U.S. perspective, the chance that the constitution changes the law is highly doubtful.

Clayton Dube also believed the trend of US birth tourism would continue, unless the living condition, education, and many other components progressed in China, which would made it less necessary for parents to pave a better way in another country for their children.

John’s Violin Shop

September 16, 2014 by Meng Lu Leave a Comment

“We used to have multi-million business back in 1998-2004.” John Han, the owner of John’s Violin Shop, talked about the most prosperous period of time of his business. “But when the real estate bubble hit America in 2007 we have several rough years, annual sales were as low as $200,000. It barely covered the store’s expenditure and I lost near one million dollars.” Han said.

Located at the intersection of Olympic and Catalina, Han’s music instrument shop shares Olympic/Vermont’s liveliness as well as Catalina’s tranquility. With more than 20 guitars hanging on the sidewall of the lobby, a little show stage at the corner with drums, and keyboard, the space is divided by several electronic pianos in the middle, and some layered up sound mixers to the ceiling. All the saxophones, trumpets and violins are hanged behind the counter for sale. The doors of the two small cubicles at the back are closed, with harsh and unskilled violin sound flowing out. A small but cozy music store.

His business kicked off in another store step away in 1994, and had to move to 6^th street in 2008 after huge loss from the nationwide economic crisis. “I could not afford the rent of my old store at that time, people don’t come by but I still need to pay huge amount of electricity, rent and other daily expense. I couldn’t afford that.” Han said.

As a matter of fact, He said the business turned downward since 2004 as a result from the growing popularity of the Internet. People started to look for information online instead of coming by physical stores. Meanwhile, C2C and B2C mode entered the market and began to eat a large share, and websites such as eBay became a new platform for selling and buying products. Potential customers commonly try and test different brands of instruments in a physical store and then shop online for the best price. Accessories such as strings, drumsticks, sheet music, and tuning condenser are often discounted online. Some even call real music instrument shops as “showrooms” of online stores. Except music business, the Internet also affects other businesses, including record stores, bookstores, travel agencies and post office for the time being.

However, Han said the biggest strike was still the economy recession from 2007-2012. In terms of the competition with the internet, he believed brick-and-mortar stores won’t be stock out of the market because customers still need to come for instrument checkup, repair and music lessons. “Like this one, it’s not even a violin bridge.” Han pointed at the oversize bridge under a violin’s four strings left by a Chinese customer. “China produces some of the best violins in the world, but violin workers in China don’t have good knowledge of the instrument itself,” Han said. In his forties, Han has already earned over 20 years of business experience, and he knows what makes a good violin store. He knows violin, and in his opinion, violins are only mass-produced pieces of wood if workers don’t know much about the instruments. He has many customers buying guitars or violins from the Internet coming to him for help tuning and repair. In his defense, store owners also benefit from the Internet because they can post adds online and get more publicity.

Han moved back to Olympic when the economy started to warm up in 2012. Instead of leasing the original location he started in 1994, he chose a much smaller outlet in the same street in order to cut budget. Till today, Han’s store has not fully recovered from the nightmare in Great Recession.

So far Han is happy with the growing business, even though it is still not as good as in late 1990s and early 2000s. He has 25 students learning different instruments there, ranged from 6-year-old elementary school kid to 74-year-old grandparent. On average about 35 customers visit the store, and since it’s back to school season right now, visits are almost doubled. Except September, Christmas is another busy period as a holiday season. Light season such as February and November, Han likes to add more promotions to stimulate the business.

Currently Han earns around $300,000 to $400,000 a year. He plans to accomplish half-million revenue in 2014, and aims to fully recover before 2020.

Low-wage Workers Growth versus California Economy Recovery

September 3, 2014 by Meng Lu Leave a Comment

California’s decreasing unemployment rate indicated the state is slowing healing the scar by the great recession, but looking in to the average wages, a growing share of lower-age jobs sheds doubts to the sign of economic recovery in California.

According to the statistics provided by the California Budget Project, low to middle-wage workers have been paid less over the last decade. By the end of last year, low-wage workers were paid 12.2% less than similar workers paid 35 years ago, after adjusting for inflation. In comparison, high-wage workers were paid 17.4% more than similar workers made in 1979.

Analysts forecasted that in the coming decade low-wage jobs will keep growing in the workforce market. Slow wage growth certainly shed doubts to economic recovery for low to middle wage Californians.

So what does this mean? California’s growing job market lift up the employment rate in the state and makes itself one of the fastest rates in the nation, but the growth of jobs is over concentrated in the growth of lower-wage workers. Indeed, not only California, the recovered job lost during the recession in the U.S. also comes with average of 23% less payment in the new jobs. Large percentage of low-income workers could indicate California pays less in support for higher education investments.

Some say that despite the increasing number of low-income workers, interestingly, the minimum wage of California has been increasing throughout decades. The current minimum wage is $9.00 per hour, far higher than $2.90 per hour in 1979. The newest minimum wage of $10.00/hour will be officiated in 2016.

However, the rising minimum wage does not necessarily indicate the diminishment of lower-income workers. Together with the increasing living expenses, people’s demand for salary increased throughout these years. Raising minimum wage is still in demand to boost the pay for low-wage workers to shrink the gap between low and high incomes. In the meantime, analysts advocate government to invest more in higher education, affordable preschool and after-school care to assist working parents.

MMM

Money Marks & Media - Spring 2014