The New Yorker’s Evans Osnos ventured to Macao in this week’s issue, and his piece has tons of awesome insight on a place so wild that U.S. diplomats have called it “Macao Laundry Service.”
And it’s not because the place gets your sheets nice and bright.
That said, one part of the piece that really caught our eye was a tidbit about how Chinese people see gambling and the stock market.
First off, Desmond Lam, a marketing professor at the University of Macao explained that gambling is pervasive in Chinese society, and has been since the Xia Dynasty (2000-1500 B.C.). Part of that, he said, is because they are obsessed with luck and fate.
“Americans tend to see themselves in control of their fate, while Chinese see fate as something external,” Lam said. “To alter fate, the Chinese feel they need to do things to acquire more luck.” In surveys, Chinese casino gamblers tend to view bets as investments and investments as bets. The stock market and real estate, in the Chinese view, are scarcely different from a casino.
There are even studies to back that up.
The behavioural scientists Elke Weber and Christopher Hsee have compared Chinese and American approaches to financial risk. In a series of experiments, they found that Chinese investors overwhelmingly described themselves as more cautious than Americans. But when they were tested the stereotype proved to be a fallacy, and the Chinese took consistently larger risks than Westerners of comparable wealth. (The gap applies only to investing; asked about decisions in health care and education, the groups were indistinguishable.)
Some theorists think there’s more than one explanation for this phenomena. Here are two:
One explanation, which Weber and Hsee call “the cushion hypothesis,” is that traditionally large Chinese family networks afford people confidence that they can turn to others for help if a risk does not succeed. Another theory is more specific to the boom years. “The economic reforms undertaken by Deng Xiaoping were a gamble in themselves,” Ricardo Siu, a business professor at the University of Macau, told me. “So people got the idea that taking a risk is not just O.K., it has utility.”
So yeah, next time you’re talking to your Chinese investors, keep all of this in mind.
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