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Comment by SuoDuanDao | Hacker News Reader

I remember a significant anecdote about Chinese assumptions when a Chinese-Canadian I was dating explained she always goes to busy restaurants on the assumption that a lot of customers means they have good food. The western bias is towards being the first to discover an unknown restaurant with great food that just hasn't had time to build a reputation, but that's not how a typical Chinese person would approach the restaurant problem.

Abstracting that decision-making style to retail investing in a country with a bias towards savings, and the nature of Chinese equity markets makes a lot of sense.

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your description about the average Chinese mental feature might be right. But the restaurant example is not correct. Maybe a little off topic. I'm a Canadian Chinese my self. I learned hard lessons within Canada so I will likely to choose busy restaurant. In China there might have long queues for special brand food from some unique restaurant but usually people don't wait for dinner or lunch. Average Chinese are impatient just like average American. When they expect waiting for a casual lunch, most of time they will turn around to find next restaurant because there are countless attractive options.

Canada in general is a slow country and restaurant market is not competitive with exceptions of a couple of big cities. Waiting is normal for Canadian. In early times, being impatient I've made many wrong choices by turning around to find a less busy restaurant which always led to terrible experience without exception. Before I made wrong choices I was thinking that how those busy restaurants can survive by treating their customers so badly to let them wait in hunger. It turned out that alternatives were always worse. In China both are likely to be replaced by competitors very quickly with better services. In Canada both survived for long time. Differently market ecology. So I leaned to choose the less evil of them

>> always goes to busy restaurants on the assumption that a lot of customers means they have good food.

It is actually good heuristic, I would just modify it ever slightly.. lot of customers means that they will not serve "stale" or yesterday's food.

That's actually a very useful heuristic because, unlike perhaps in the US, in many parts of the world food standards even in higher quality restaurants are rather lax.

Even in the US I learned the hard way about eating lunch early. Chipotle is perfectly fine with serving old steak from yesterday if you're one of the first customers of the day.

Overnight-marinated special.

I was told once that Wendy's chili is made from the hamburgers that weren't sold the day before. I don't know if it's true or not, though. Even if it is, that's some fine chili for a chain fast food restaurant.

That must be American Exceptionalism. Wow.

>It is actually good heuristic

No it's not. It assumes there's a correlation between quality and customers, or at least that quality is a prime cause of customers. But there's no reason to think that's the case. In fact, it's more likely that location is the prime factor: the restaurants in Times Square in NYC are very busy, but they are by no means the best in the city or even particularly good. They just have great locations in the heart of the tourist zone.

I remember reading something by Tyler Cowen where, with regards to NYC restaurants, he advised trying the ones on the streets and not on the avenues, because the streets get less foot traffic and so have to be better to draw people in. I've found this generally to be true living here.

After location, the second most important element is probably hype/fame. The hot restaurant of the moment isn't the best restaurant of the moment, it's the one that has managed to capture people's attention, which could be for a variety of reasons ranging from a celebrity chef to some new gimmick.

The vast majority of america does not have such a bias toward location. It's makes a good heuristic, in america. It's not surprising when there's exceptions.

I agree with this being a valuable heuristic. Not for whether or not the food tastes delicious in terms of seasoning or flavor, but are they moving product. It’s easier to think of it in terms of a butcher shop. You don’t want to buy meat from a butcher shop that gets few customers (yes exceptions for boutique expensive butcher shops). You want the busiest butcher shop you can find that meets your other parameters. It’s only one factor, but I consider it a rather important one.

I’ve seen too many episodes of Kitchen Nightmares and similar shows to take a chance on a low volume restaurant that isn’t low volume due to an intentional design decision.

When traveling abroad, pick the restaurants where the are lots of locals as opposed to the ones filled with other tourist

One thing worth bearing in mind about the restaurant analogy:

The life cycle of restaurants in China is often very short - they open with investment and fanfare. They’ll have a great chef on board, a new and interesting signature dish, good ingredients, new equipment and high standards. After 6 months, all going well, the investors have made back their money. After 12 months, the profit has been made and the owners might look to sell. After 18 months, the place has beeen sold at an inflated price and the new owners will cut costs and quality to squeeze as much money as possible out of the place for its remaining lifespan.

So, a crowd of people means the place is new and quality is still high. No crowd means it’s either just crap quality, or it’s towards the end of its life cycle and quality has dropped.

Someone else can tenuously try relate that to Chinese investment psychology :)

> The western bias is towards being the first to discover an unknown restaurant with great food that just hasn't had time to build a reputation, but that's not how a typical Chinese person would approach the restaurant problem.

"I found it before it was cool" is a comparatively small thing in the US. The crowded restaurants aren't Chili's or On the Border, as trends have changed, but Instagram, Yelp, etc, drive huge crowds to a certain group of winners. The whole "influencer" thing is a marketing industry desire to capitalize on followers, a concept that is very accurately named.

This is actually a very old notion that pre-dates social media, and even computers.

Back when long summer family road trips were the norm, a common saying was, "Eat where the truckers eat." Truckers were the Yelp influencers of the era.

Roadside diners, especially chains, would have oversized parking lots to attract truckers, which would then attract families. This was further capitalized on by the diners opening motels in back. (Think Howard Johnsons.) Or by other hospitality chains deliberately opening near popular diners. In a college marketing course, I remember it being noted that a certain hotel chain (Holiday Inn, maybe?) rarely did its own location research, and instead just opened across the street from every outlet of a particular diner chain (maybe Denny's) that it could.

To this day, motels and diners have a symbiotic relationship, though now probably for convenience reasons since, as you noted, people can find out about other options more easily on their smartphones.

Why do you think that perspective does not apply to americans? I don't eat at proper restaurants much but when I ate fast food,the busiest ones also had more people flocking to them(chick-fil-a for example). Not many people line up to eat at a no-name off brand chain that just opened,and I see those pop up and go out of business a lot.

It's not a cultural thing but how one is brought up. Upper class or rural chinese might have a different approach just as americans from different walks of life and from different states might view it differently.

Same goes for investing, those who plan for long term gains have a different perspective than those who want 'buy low. Sell high.' For short term profits.

Why do you think that perspective does not apply to americans?

I can't speak to his logic, but I think the whole issue is a lot more complex than is presented in this discussion.

Convenience plays a big role in American dining habits. So does price and habit. And some people react strongly to coupons and advertising.

I think Chick-fil-a is far better quality than Raising Cane's. But the Chick-fil-a in my town is on the wrong side of a road median, and if I'm picking something up on my way home, I'll hit the other chicken place instead of wasting 20 minutes making U-turns.

But if you want to take the kids out as a 'reward' meal,assuming you never been to either establishment,would you go to a busy chick-fil-a or a new not so busy raising canes closer to your house?

Convenience applies to fast food but restaurant dining is a bit different,I think what is more relevant to the thread is quality seeking customers as opposed to convenience. Investors want quality over convenience,how they decide on what is of good quality is the debate.

This sounds like the pre-Yelp and pre-Instagram Western food culture. Big cities, in my experience, are just as trend hoppy as Asia these days.

> Chinese assumptions when a Chinese-Canadian I was dating explained she always goes to busy restaurants on the assumption that a lot of customers means they have good food.

Same concept here in Pakistan [guess we Asians think alike ;) ] - we go to busy restaurants and shops assuming they are full because they meet the requirements (good food, low prices etc)

> in a country with a bias towards savings

that's a myth that keeps being persisted, much like their consistent 6-7% gdp growth every year.

if you read the article, it mentions that 'He and his family had invested 7 million yuan - their life savings'.

"The Myth Of China's 'Excess Savings' Is Weighed Down By Excessive Debt. Bank balances offset against enormous, rapidly rising, bad debts, a property bubble out of all contact with reality, a closed capital account to prevent money draining overseas while it still can, and an unregulated shadow banking sector where vast pools of notional value endlessly gyrate on air currents of uncertain origin"

https://www.forbes.com/sites/douglasbulloch/2017/04/26/the-m...

The average Chinese citizens savings have now been engulfed in bitcoin crash, stock market crash, real estate bubble, p2p lending, and gold crash. When money can't leave China because of capital controls for average citizens, money goes into a risky bubble (otherwise it gets eaten away by inflation).

The biggest bubble, China's real estate, which has "$202 per square foot. That's 38 percent higher than the median price per square foot in the U.S., where per-capita income is more than 700 percent higher than in China." https://www.bloomberg.com/view/articles/2018-06-24/why-china..., is at a dangerous size. And it could be bursted by any external factors: Trump's threat to tax $500B Chinese imports, manufacturers hastened exist from China, Fed raises the interest rate a few more times, faster capital outflow from China, one of the emerging market's collapse, one of the more indebted private firm collapses, triggering a wave of collection, etc.

Those property prices aren’t unreasonable given lack of property tax and higher population density. It’s the same in india.

https://www.bloomberg.com/gadfly/articles/2018-03-08/don-t-b...

IIRC there's also no such thing as property ownership in the US sense - it's just a 70 year lease, which can be renewed.

in 70 years, i will have paid for my property 3 times over in texas property taxes. So the US sense is more like a 20-40 year lease depending on the tax rate.

Fair point. I guess Nevada is the only place I've heard of where you can buy out of property taxes for a one-time fee.

I'm having a hard time finding details on nevada.

is it in here ? not finding it with a few quick keywords or under exemptions.

https://nevadataxpayers.org/wp-content/uploads/2016/10/prope...

Not sure, maybe it's not active anymore.

https://en.wikipedia.org/wiki/Allodial_title#Nevada

Thanks. Wikipedia says Nevada stopped granting it in 2005. It was only given between 1998 and 2005 for primary residences.

How does anything you said indicate that Chinese having a bias towards savings is a myth?

Investing money in bitcoin, stocks, real estate bubbles, etc. is still saving (not consumption). Might be bad savings, but it's still savings.

Perhaps he sees a distinction between "saving" and "investing."

Before the bank deregulation in the 90's this was a more vividly defined line.

To my parents generation, saying, "I keep my retirement savings in a 401(k)" is an oxymoron.

>The western bias is towards being the first to discover an unknown restaurant with great food that just hasn't had time to build a reputation, but that's not how a typical Chinese person would approach the restaurant problem.

But that's not bias, the Western approach is correct and the Chinese approach is wrong, if the goal is to find good restaurants (with the assumption that "Western" and "Chinese" approaches are as described above).

Despite being a westerner, I haven't heard of this correct approach to finding good restaurants, could you share with us what this is?

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