and India are very different in many ways. So why put them together in a book? The answer is simple: the increasing size of their populations, the growing power of their economies, and—most important of all—the emerging mass of ambitious, educated, middle-class consumers who want more now. The two countries combine to represent the number one and number two consumer opportunities of today. Both countries have enormous upside. The increase in annual consumption by 2020 will be $4.2 trillion in China and $2.6 trillion in India. Anyone with global aspirations will need to compete successfully in both China and India.
There are some who fear China’s and India’s growth, viewing it as a harbinger of doom for companies in developed economies. But we do not see it this way. We think it heralds a bright new future with abundant opportunities for those willing to seize the moment.
In the classic film On the Waterfront, Marlon Brando plays the role of Terry Malloy, a former heavyweight boxer who once had a shot at winning a big title but blew his chance. Far from being a champion, he works as a day laborer on the docks of New Jersey. “I could have had class,” he says regretfully. “I could have been a contender.” Today’s leaders need not have any such regrets—as long as they act fast.
There is no time to lose. The contest has begun.
ONE
Consumption in China and India
The Dawn of a Golden Age
What and why the new consumers buy, how they think and shop, how their needs and tastes are changing
WE KNOCKED ON THE DOOR. There was no sign, just a street number. “Is this the Li family restaurant?” we asked, after a tortuous walk through the alleyways of Beijing’s Xicheng District. The older woman who had come to the door nodded and then called for her grandson, who hurried to the entrance and, speaking English, invited us inside the plain cinder block building.
We were shown to one of three Formica tables and sat down on rickety folding chairs. A fan whirred in the background. We could see the chef and his assistants toiling in the kitchen, seemingly oblivious to the bright flames leaping over the pots on the open cooktop. Tantalizing aromas drifted through the room as we were handed the Chinese-language menu with pictures of a few of the delights soon to be coming our way.
Across from us, four garrulous Texans were feasting on the restaurant’s most expensive option—a set of dishes that the menu dubbed “the grand banquet.” At the other table, five Chinese men wearing white shirts and plain blue suits were delighting in the menu’s midpriced option, nudging each other and smiling when they found a dish particularly good.
We too selected the midpriced option, and soon the dishes started to arrive: an exotic mushroom soup, a small plate of prawns with snow peas, hand-carved carrots, and jasmine rice. After that, shark fin soup, then abalone and more mushrooms, and then scallops on a bed of leeks. We paid a slight premium for the restaurant’s version of Peking duck—paper-thin crusted skin, succulent meat. Dessert was three courses—a pineapple sorbet with small fruits, hand-decorated cakes with a raspberry sauce, and a double-chocolate torte with a hot filled center. At the end of the meal, we had to pay cash, because the restaurant did not accept credit cards. But it did not matter—we had enough renminbi to cover the cost of the meal: $10 per person. It was a meal that we will remember for a lifetime—magnificent cuisine in a humble setting served with grace and style by the cook’s extended family.
Even then, nearly two decades ago, this was a bargain. The food was visually stunning, perfectly plated, sensuous, and exotic. It was, in fact, fit for an emperor. Li Shanlin, the restaurateur, is the grandson of the supervisor of the last emperor’s imperial kitchen. His grandfather, Li Shunqing, was lord secretary to the dowager empress and was responsible for the imperial menu inside the Forbidden City.
Born in 1920, Li grew up watching his grandfather prepare imperial-style meals. But after university, where he studied aeronautical engineering, he became a scholar, teaching mathematics at the Capital University of Economics and Business in Beijing. During the Cultural Revolution, when Chairman Mao waged an offensive against intellectuals and party elites, the university was closed. Purged from his university post, he turned to the study of imperial cuisine, refining the recipes that his grandfather had handed down.
Li eventually returned to teaching. But at the age of sixty-five, when he finally retired, he reawakened his lifelong passion for cooking—and he took his chance, opening a three-table restaurant in the family home (figure 1-1). In the beginning, there were no employees; family members served, cleaned, and helped cook. Food preparation was classical, with a sharp knife, perfect ingredients, and a focus on taste, texture, and visual presentation. In this sense, he was way ahead of his time, spurning modern cooking equipment, microwave ovens, and food processors.
Although it was hard to find, Li’s restaurant soon garnered critical acclaim. As a result, it then became hard to book a table. According to the family, Bill Clinton, Jackie Chan, Bill Gates, and the Rolling Stones have eaten at the original restaurant. And, indeed, as we paid, we saw a framed note from Bill Clinton, which expressed his thanks for “a wonderful time.”
Today, if you visit the newest branch of the Li family restaurant, it is equally hard to book a table—but the experience, not to mention the cost, is altogether different. For a start, the restaurant—called Family Li Imperial Cuisine—is hard to miss. It is located just off East Zhongshan Yi Road, Shanghai’s grand riverfront boulevard. The building is magnificent, with a glass and marble interior, a lily garden with a fishpond, spacious private dining areas, gold-plated dinnerware, and a wine list to rival Paris’s finest restaurants (figure 1-2).
FIGURE 1-1
The first Li family restaurant in Beijing
The top-priced set menu is RMB 2,000 (around $300). It features, among other things, scallops, deep-fried prawns, stir-fried cabbage with pheasant meat, bird’s-nest soup, duck with shrimp paste and sesame, and steamed snow frog. This can be washed down with a bottle of a 1990 Château Lafite Rothschild for RMB 16,800 (around $2,700).
Shanghai has become one of the world’s capitals of cuisine, supported by talent, investors, and fresh-food supply chains that did not exist when Professor Li first launched his enterprise. Now, the Li family restaurant successfully competes with other prominent restaurants in the city once known as the Paris of the East, including Jean Georges (from France’s Jean-Georges Vongerichten), Laris (from Australia’s David Laris), and Issimo (from Italy’s Salvatore Cuomo), as well as the restaurant of Ho Wing, the former chef at The Hong Kong Jockey Club.
FIGURE 1-2
A beautiful water garden at the new Li family restaurant in Shanghai
The Li family restaurant in Shanghai is the story of newly affluent Chinese consumers living like emperors: choosing the best food and wine, enjoying haute cuisine in a magnificent setting. It is about pleasure, personal indulgence, and, to some degree, hedonism. The painful years of subsistence living are distant memories that can be put behind with today’s purchases.
The Rise of the Newly Affluent Consumers and the $10 Trillion Prize
In 1992—a few years after Professor Li had opened his first restaurant—Deng Xiaoping, China’s supreme leader, made his famous southern tour of China’s
