Chinese Real Estate Sector: Lessons from a Thousand-Year Monopoly
Introduction:
The old saying “history makes one wise” applies to how some things have changed throughout time. Two factions have emerged as major players in China’s economic history: the old salt merchants and the contemporary real estate moguls. Despite their apparent disconnection, these two groups have startling commonalities at certain points. We may learn more about the real estate industry’s character and the lessons it can teach us by looking at it through the prism of its past.
The Parallels between Salt and Real Estate:
It would seem that salt and houses are completely unrelated at first look. Upon further examination, however, they do share crucial characteristics. The first is that their demand is somewhat inelastic since they are both requirements. The second is that their supply is susceptible to monopolization and control under certain circumstances. A ruler’s ability to unilaterally control output and pricing of salt was a feature of ancient governance over salt-producing areas. Similarly, in the present day, local governments take advantage of a monopoly on the main land market by driving up property prices.
During the Spring and Autumn Period, when Duke Huan of Qi hired Guan Zhong as a minister, he instituted salt monopolies, marking the…
