Beijing families take on the financial crisis
As economies around the globe have slowed or fallen into recession, families in Beijing are reevaluating their budgets to prepare for potentially tough times ahead. Find out how different families make decisions about spending and saving money, whether they feel the effects of the financial crisis, and what their strategies are for making it through the downturn in one piece – or even ahead.
THE BIG SPENDERS
Christmas didn’t come last year,” says Nick Cochrane, an expat whose Beijing-based export business has taken a big hit from the global financial crisis. As major economies in Europe and North America weakened in the fall, Nick and his wife Katherine* acted quickly to slash their business and family budgets.
Entrepreneurs in their late thirties who have lived in Beijing since 2003, the Cochranes, who have an 8-year-old daughter named Zoe, had planned for a rainy day. With backgrounds in business development and accounting for Fortune 500 firms, the couple had forecasted different economic scenarios and so were able to swiftly implement a contingency plan. They laid off employees and made significant changes to their lifestyle.
Despite the downturn, the two were surprisingly sanguine. “It’s much easier to handle an external financial crisis than events like a family illness over which you have no control,” says Katherine, adding, “If you can put it on a spreadsheet, you can manage it.”
In total, the Cochranes trimmed almost RMB 340,000 from the family’s annual budget. Travel was the first item on the chopping block. Although the Cochranes had rewarded themselves in times of plenty with first-class holidays (including an odyssey through India on a luxurious private train), the family will take just one trip this year: a vacation back home to Canada, paid for in part with frequent flyer miles. In place of travel, they’re seeking out concerts, ballet, theater and “little things that bring joy,” says Katherine.
Rent was next to go. In January, the couple petitioned their landlord for a rent reduction on their luxury apartment and identified other flats into which they would move if he declined. The Cochranes also postponed plans to purchase a new car or a country home. The hardest challenge came when the Cochranes had to cut spending on their two ayis, who have families to support. “I’m flopping. At first we made a clear decision that one would go but now we are contemplating reducing both of their hours instead,” says Katherine.
One item the Cochranes were unprepared to sacrifice was tuition for their daughter’s international school. “Even if things were really dire, Zoe’s school would be the last to go,” says Katherine, adding that they planned to ask the school for a discount.
Since Beijing is one of the world’s most expensive cities, the Cochranes don’t find it an ideal place to ride out the recession; they have discussed moving their company’s headquarters to the US. For now, though, they will remain in China.
As parents, Nick and Katherine have tried to shield their daughter from talk of gloom and doom, but they’ve also brought up the possibility of moving. “We are discussing it openly,” says Katherine. “Zoe asks a few questions here and there, confirming that her world will remain as is, but they are questions about details.” Katherine believes she and Nick have an opportunity to impart a valuable lesson: “This is a chance to teach Zoe that setbacks can happen – and be overcome.” Adam Pillsbury
The Monthly Budget (RMB)
Rent WAS: 23,800 NOW: 13,600
Taxis and car 6,800
Ayis WAS: 6,800 NOW: 4,100
Healthcare 5,440
Restaurants 3,400
Clothes and shoes 3,400
Groceries 1,700
Massage and beauty 1,700
Kids’ classes 1,360
Books and DVDs 1,000
Travel (per year) WAS: 204,000 NOW: 34,000
Tuition (per year) 136,000
