Cheap Chinatown

January 10, 2005 5:09 PM

The economics of Chinatown: why is stuff so cheap there? [Your fortune says: more inside!]

I'm lucky to live in Toronto, where there are a couple of Chinatowns. I've always wondered why groceries and household goods are so cheap there relative to mainstream outlets. Why does Chinatown seem immune to larger local market forces? I have my own guesses, but I'd really welcome some evidence-based reasoning.

posted by stonerose to shopping (14 answers total)

Can't speak for Toronto's Chinatown, but in Seattle's chinatown, the density of commerce seems to lead to a degree of competition that isn't reached in other quarters of the City. Also, for certain goods, like beef, some of the markets deal in lower grades of meat than you'd fine in a normal supermarket (USDA grades having everything to do with the distribution of fat in the meat, and nothing do with other measures of quality).
posted by Good Brain at 5:20 PM on January 10, 2005

I haven't found the Spadina Chinatown to be that cheap. For household goods, the prices are right around the prices found in dollar stores across the city, or even Wal-Mart, and the groceries are in the neighbourhood of the prices at a No Frills or Price Choppers grocery store. It might just be the perception. Run-down stores, big unorganized bins and shelves. I doubt that there's much of a difference between Chinatown and other low-end retailers for comparable goods.
posted by loquax at 5:30 PM on January 10, 2005

What I've noticed is an "ethnic food" premium at "mainstream" supermarkets, viz., if you're looking for Chinese foodstuffs, you're better off with the prices and selection in Chinatown because you'll pay a lot more, and find less, at the Loblaws. I have no special insight into why this might be, only guesses about the results of having different suppliers.
posted by mcwetboy at 5:42 PM on January 10, 2005

Owners of cash businesses often practice a degree of tax evasion. (hypothesis)
posted by trharlan at 6:43 PM on January 10, 2005

Why does Chinatown seem immune to larger local market forces?

On the contrary, Chinatown is an excellent example of market forces. Two words: Low Overhead.

Low overhead= increased profits= lower prices.
posted by Fuzzy Monster at 7:36 PM on January 10, 2005

I find Spadina cheap, but I think basically it's that they only sell cheap stuff. I mean you don't see much high end stuff in Chinatown (if you want that you have to go south to the Spadina and King area where you can buy just as many overpriced Calphalon pans and egyptian sheets as at the mall). The stuff they sell is pretty much the same stuff they sell at dollar stores. It's cheap to make and cheap to sell.

The exception is restaurant food (a yummy sit-down lunch brought to your table, still $5 including tax at Lucky Dragon -- and they passed their health inspection). But the service isn't great, I don't doubt that the wait staff is underpaid and white rice is pretty cheap, especially in the quantities they must buy it.

Now somebody explain to me how the Dollerama in Cloverdale mall sells bras for a dollar. They're decent bras, too. That one really creaps me out.
posted by duck at 8:34 PM on January 10, 2005

I think it might be that they sell cheap stuff, but a different selection of cheap stuff than you see in generic dollar stores and the like, thus you think it's a different class of stuff. You can get those embroidered satin slippers for a few dolllars, and they look lovely, but they don't last long.

I especially love the store next to Gwartzman's at College and Spadina. Every time I go in there I see a hundred things I just love - and I'm normally a very picky shopper.
posted by orange swan at 5:13 AM on January 11, 2005

Here in NYC, I've begun buying most of my seafood and meat in Chinatown because it's SO much cheaper than anywhere else. I've wondered why, myself.
posted by mkultra at 7:44 AM on January 11, 2005

Rents are cheaper. Lots cheaper. Look at Boston, or NYC for examples that I know of. Two apartments, 1 block apart rent for quite different amounts. This is probably the case for retail storefronts, too.

Now *why* rents are cheaper is another question. Real estate is not (always) fungible, so maybe there are extra-market forces at work. In Boston, for example, yuppies are encroaching on chinatown with two large apartment buildings going up right now.
posted by zpousman at 9:58 AM on January 11, 2005

Now somebody explain to me how the Dollerama in Cloverdale mall sells bras for a dollar. They're decent bras, too. That one really creaps me out.

I can't say much about Chinatowns (volume has something to do with it) but here's the deal with the dollar stores.

Dollar stores are making a profit. If you explore their business model, you'll see that is works because of globalism. A vast majority of the products you'll find in most dollar stores are originally made in China. The incredibly low cost of labor in China enables factories and sweatshops employing people at far-below- poverty wages, including children, to produce no end of resin figurines, clothing, utensil sets, plastic food storage tubs, and inferior dishware. Once produced in volume, these products are sold to a packager, who boxes them in quantity and then loads them as excess cargo on enormous container ships. These ships are unloaded in major urban centers where there are container ports. Warehousers take the giant boxes full of crap and put them on display in giant warehouse trade shows.

Then, buyers from the dollar stores (both indie stores and dollar chains, of which there are many) go to the trade shows and look at all the goods. Then they purchase the items they want to carry in their dollar store. They're usually buying by the 1000-case. Some of those cases cost almost $1000; some cost much less. Occasionally there's a loss leader that costs a bit more. But, shocking as it may seem, when all 1000 of those little resin sheepherder statues are sold, the store will have made a profit above the cost of purchasing & shipping the cheap merchandise.

This also explains why some dollar stores have better merchandise than others. There are cheap dollar stores, where they've gone for the low-end $100-$300 cases, and high end stores, where the cases cost $5-800 and may feature some loss leaders. This is also why when they sell out of certain goods, that's it. You won't see them again.

All of this tells you much more about overpopulation, totalitarianism, and extreme poverty in China than it does about American profit margins. It's still true that you buy low and sell high. It's just so sad that labor is so cheap elsewhere in the world that someone can make a profit selling resin figurines to overspending Americans.
posted by Miko at 10:08 AM on January 11, 2005

Now somebody explain to me how the Dollerama in Cloverdale mall sells bras for a dollar. They're decent bras, too. That one really creaps me out.

The dollar store near me sells home pregnancy tests.

Two for a dollar.

Personally, for something like that, I'd be willing to splurge.
posted by Kellydamnit at 10:15 AM on January 11, 2005

I've seen pregnancy tests for $1 as well.

Don't dollar stores also take other stores' unsold merchandise, stuff that just wasn't moving from warehouses and would be destroyed otherwise, at pennies on the dollar?
posted by u.n. owen at 1:47 PM on January 11, 2005

Yes, I should have added that overstock and 'dead stock' is also a large part of this merchandise - that's why sometimes you'll see weird things like 1970s hair nets still in the old-school packaging -- somebody found it knocking around a factory somewhere and liquidated it. . But the bulk of dollar store-iana is bought at warehouse shows.
posted by Miko at 2:14 PM on January 11, 2005

It's a cultural thing -- Chinese business has always put a premium on volume of sales over margin on individual items. You see the same economics in play at Chinese restaurants, which is why the food is always so much cheaper there. And backwards all the way to the supplier.
posted by Big Fat Tycoon at 6:31 PM on January 11, 2005