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Revisiting “The Best Business Model in China”

In July, Rodney Johnson wrote about “Possibly The Best Business Model In China,” which was, of course, to open a gay bar.  Yahoo News reiterated exactly why this was such a good investment idea:

More than 24 million Chinese men of marrying age could find themselves without spouses in 2020, state media reported on Monday, citing a study that blamed sex-specific abortions as a major factor.
The study, by the government-backed Chinese Academy of Social Sciences, named the gender imbalance among newborns as the most serious demographic problem for the country’s population of 1.3 billion.

Link to article: “Skewed China birth rate to leave 24 mln men single“

The number of “excess men” we have quoted in the past by independent demographers is 32 million, but the fact remains that China is facing an acute shortage of women.  With no prospects for a traditional family life, many men who might normally have stayed “in the closet” in the interests of having children might, at the margin, decide to come out of it.

Chinese authorities had better hope that they do, because the alternatives are troubling.   Abductions and trafficking of women are already “rampant in areas with excess numbers of men,” according to the article.   Forced marriages and forced prostitution are also on the rise.

For decades, there has been a flourishing “mail order bride” trade from the countries of developing Asia to the West.  Perhaps another growth business might be a similar trade from China’s poorer neighbors into China.  Or, given that this is China we are talking about (a country with…shall we say, a questionable record on human rights), might we see forced abortions of male fetuses in an attempt to “fix” the imbalance going forward?  Or perhaps arbitrary arrests or forced conscription to get “excess men” off the streets?  Who knows.

In any event, the gender imbalance in China will almost certainly be a source of instability and social upheaval for the foreseeable future.

Charles Sizemore, CFA
Co-author of the recently-published Boom or Bust: Understanding and Profiting from a Changing Consumer Economy