Andy Carpenter

One of the many things you can learn about Asia only by going there a lot is that it is chock full of great Italian restaurants.

In Shanghai, I love DaMarco – it’s hidden amid an apartment complex.  You can get a great pizza at Pasti, which if memory serves me right is on Beijing Xi Lu.  And of course there is the fabulous Roman fare at Palladio in the Ritz Carlton.

You could drop these amazing restaurants in Boston, Auckland, Toronto, or Dublin and they’d be standouts.  What once made them extra special was that an undervalued Chinese currency and low inflation made then stellar values as well.

Of course that’s all changed. A combination of factors, driven primarily by logistics, weather, and food-safety issues, have seen China’s average grocery bill spike by 18 percent during the past year.

Some of that price bump also has to do with the fact that salaries for middle-class, white-collar workers and factory workers have steadily climbed.  So the Chinese can simply afford to pay more without grumbling.

But the man on the street in Beijing, the woman on the street in Shanghai, and the student in Nanjing now pay more for luxuries, large and small.

That’s because while China has, for the past three years, been exporting inflation to the United States, it has been importing it in the form of European and American business people and tourists. 

Most of them don’t know the value of anything in China.  A way favorable exchange rate meant they could capriciously throw Yuan at their desires.

And it is our desires, after all, that really fuel inflation.

Hooked On Inflation

In Beijing, my desire for cold beer always leads me to Maggie’s.

One of Beijing’s oldest bars, it has often relocated, but in 1999 it landed at the East Gate of Workers Stadium, which is the Olympic soccer venue.  The combination of stadium renovation and the high profile location caused Maggie’s to be relocated to South Gate at Ritan Park.

The move also put it close to many embassies and just minutes from a ton of new and established business-class hotels in central Beijing.  That’s likely great for Maggie’s … but not so good for Chinese inflation.

You see, Maggie’s is famous for very cold beer, attentive bartenders, DJs who play 80s-style rock music, a crowded eruo-dork-filled dance floor, unleveled pool tables, and most notably for its Mongolian hookers.

Since they’re generally taller and larger chested than the average Han Chinese woman, Maggie’s owners have not discouraged the girls because they are good for business.  The thinking is that the Mongolians’ size make them the kind of women foreigners find attractive.

It was long rumored that Maggie’s was owned by high-ups in the Beijing Police Department.  But the truth is that it’s owned by some very savvy Beijingese businessmen.

Judging by the crowd at its old East Gate, Workers Stadium location, Maggie’s combination of free-lance hookers and traditional nightclub amenities is a successful marketing ploy.

I’ve yet to go to the new Maggie’s.  I found out it had moved last spring when I watched NCAA basketball semifinal games (in the very early morning) at a place famous for it’s Texas Chili.  It’s just down the street from the new Maggie’s.

Now for all my trips to China, I must admit the only thing I have ever purchased at Maggie’s is cold Tsingtao for 30 rmb, which a year ago was at $3.75 but is now about $4.20.

Hook Line and Sinker

Now the sex business in China amounts to slightly less than 10 percent of its entire GDP.  I have seen statistics that prostitution alone makes up nearly six percent of China’s GDP.

So whether you’re a priss or a prude, you’re going to have to get comfortable with the fact that what happens in China’s sex trade does have an overall effect on global prices.

And, I am told, that Maggie’s free-lancers are at least 10 percent more costly this year then last, and 75 to 80 percent more costly then they were five years ago.  That’s despite the fact that the services they offer are no more improved upon than they were 1,000 years ago.

My pal Don – as well as fellow U.S. businessmen (and tourists) – is the reason why.

You see, five years ago in Shanghai, Don hooked himself up with a couple of girls who claimed they were twins.  While their lineage may have been a scam, there was nothing false about their looks.  To be fair to Don, I must admit, they were hot, as in H-O-T … hot!

Now, I could care less how my next-door neighbor spends his money, or with whom he shares his bed.  So I cared even less about what or whom a business acquaintance spent or bedded in a hotel 7,300 miles from home.

Even if those twins were hot … way hot.  Did I mention that before?

No, what got my hooter honkin’ was when Don told me he paid (the equivalent of) $90 total to rent both girls for the night.  And he was so impressed by the level of their service he gave each of them a $50 tip.

He was proud of both the price and the tip, and probably by the fact that at 62 years old he got his money’s worth.

But there’s no tipping in China.  No tipping cab drivers, a couple cents to the bellman and hotel maid … and no tipping hookers.

So even though Don sinned by not even attempting to negotiate the price with his nubile playthings, you know darn well they know what they are worth to Americans.

Each time they get a hefty gratuity, their price skyrockets.  My friend John Zhang, in Shanghai, guessed that five years before they met Don those hookers were likely getting $20 a night if they were lucky.

And I guarantee you that those girls are now getting upwards of $350 a night.  Because they are hot and because a friend from Beijing just answered an email query I sent out.

It seems the ugly Mongolians in Maggie’s are getting $210 for a full night now.

Don’s not just indirectly responsible for that either.  When my Asia Business & Investing newsletter launches on IDE, I’ll tell the rest of this story to subscribers - the losing Don in Maggie’s part and the authorities looking for Don part. 

And I am not saying Chinese hookers are the reason everything costs more worldwide today.  But they are a symptom.

Because there’s little you can do when the price goes up on the stuff that provides food, clothing, and shelter.  But inflation really digs in when you pay too much for your wants.  So you’ll knuckle down and buy that gallon of milk for $4, but you really seethe when it costs $100 to go to a baseball game.
 
Fortunately, there are places that are still somewhat inexpensive.

You can get a wonderful plate of spaghetti and meatballs in Bangkok at an Italian food stall called Jo-Joe Pasta.  For 65 baht, or just under $2 a plate, Chef Joe, who worked at the superb Gianni’s, is setting out the real deal.  He’ll also serve you a beer for about $1.80.

You can find Jo-Joe Pasta just off the corner of Lang Suan Soi 5 and Soi Tonson in the Ploenchit area.  Best to go by motorcycle taxi.  Joe’s is closed on Sunday.

Of course, Bangkok is legendary for something other than $2 spaghetti

Whoops … we just ran out of space here.

See you Saturday in IDE’s weekend edition.

Andy Carpenter

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