Many western economists call on the chinese to spend more to help stimulate the global economy as they are saving too much. In China, the average savings rate of urban households is 29% in 2009. If we compare the average chinese savings rate to the net profit margin of the companies that make up the DOW index, the chinese wins hands-down with their 29%.
Net profit margin (%) of last financial year:
Net Profit Margin (Companies) is what's left after deducting costs, utilities, salaries, rent etc
Net Profit Margin (worker) is what's left after deducting our bills, living expenses etc
Now let's look at 2 more companies:
- Luxury good maker Louis Vuitton 14.76%
- Current iPhone craze Apple 26.67%
Still the average chinese trumps the above 2. The mindset of the average chinese is worth emulating. Those chinese saving 33% of their paychecks is like working 2 months & accumulating 1 month of freedom. The few who save 50% is like working 1 month & accumulating 1 month of freedom.
Unfortunately many sinkies are hooked to retail therapy as a way to spend their way out of their job misery - a form of short-term happiness via a purchase.
Retail therapy doesn't work long term. Is misery galore.
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