AS Shanghai consumers grow increasingly cynical about the true value of year-end sales, the bargain-hunters go shopping far from the flash of neon lights.

Nanjing Road W., a prime commercial and luxury shopping area, mirrors the two sides of the coin in the Shanghai economy.

On one hand, there are the dazzling brands such as Louis Vuitton and Gucci, displayed in shops exuding an air of wealth and snobbery. On the other hand, there are shabbier small shops tucked away down side lanes and unlicensed vendors plying their trade on the sidewalks, back alleys and entrances to metro stations.

Some people wish the bottom of the retail food chain would disappear, believing it casts a dark shadow on the image modern Shanghai wants to project. But in a world of cities homogenized by McDonald's, high-rise apartment blocks and endless roadways, there's something delightfully human about small vendors who struggle to make a living by hawking their wares the way their ancestors did for generations.

I've talked to a lot of people who run their businesses without a license in Shanghai - the barber on the footpath, the nook family restaurant, the flower-sellers and the cobblers mending shoes. Unlicensed vendors have been existing betwixt and between for ages. True, they may clog pedestrian traffic at times, leave refuse behind when they pack up and go home, and sell shoddy products. But many are very earnest about what they do, and the goods and services they sell at cheap prices are a boon to many local residents who can't afford the high end of town.

Local residents quickly differentiate the "good" unlicensed vendors from the "bad." It's hard to last long in a tight-knit neighborhood if you try to cheat people.

The vendors, viewed from one standpoint, are a picturesque and indispensable part of city life, and governments should be lenient in dealing with them.

Who could quarrel with ladies who make a bit of money by collecting old newspapers and selling them to recycling stations? Who could blame a bicycle repair stall taking up two square meters on the pavement mending a flat tire when immediate fixing is needed?

The city's revenue would not increase appreciably if all vendors were forced to buy licenses, nor is there any evidence that the unlicensed vendors are getting significantly richer. In a sense, it's good government policy to give poorer residents a channel to take care of themselves.

These are people who are largely uneducated, don't have influential contacts and have often mastered a small craft. There are lots of stories about white-collar workers joining the legions of unlicensed vendors after getting off from work, just to make a few extra bob. But that's a different story.

Allowing a low threshold for street-side businesses helps the poor to pay their bills and probably keeps them from becoming a menace to society. The fact that many unlicensed vendors come from countryside also helps narrow the income gap between China's urban and rural areas.

A friend of mine who works in the office of a municipal bureau told me she has mixed feelings about unlicensed vendors. According to her, the chengguan, or city inspectors who patrol the streets looking for legal infractions, are trying to strike a compromises between enforcing licensing laws and tolerating the people who probably can't afford a license. It's an endless tug-of-war between the enforcers and those trying to dodge them.

"They have to be tough if they receive complaints from residents," my friend said of the city officers. "You cannot deny that it's really annoying when flea markets block roads and sidewalks. But otherwise, their actions are mostly confined to 'official inspections' or to prepare for significant events, such as the World Expo."

The city administrators seem to understand that unlicensed vendors are poor and need to find a way to support their families. In some areas where public services are not highly developed, unlicensed businesses are the only source of groceries, bike repair and other daily necessities.

"Local administrators encourage their chengguan to be softer," my friend said. "In hard times, especially now with prices rising, everybody needs to making a living."

If a few square meters on the pavement can be exchanged for fewer desperate people turning to theft, what's the harm?

My auntie, who settled in Hong Kong decades ago, paid us a visit last week. I was surprised to find that she loved going out browsing among the vendors who sell their stuff off the back of a flat-bed tricycle. She was quite happy to show us the metal hooks and small window cleaners she bought from them. Who doesn't love a bargain?

Human face

In this highly commercialized world, consumers vote with their feet. Not that many local residents in Shanghai are so wealthy that they can buy anything they want at any price. Most of my friends and relatives - and me, too - watch our pocketbooks closely. Sometimes it's not a matter of being able to afford something, but rather that human longing to buy something worth 150 yuan (US$23) for 100 yuan.

Unlicensed vendors may be poor but they are also smart. They know how to attract customers. They seem to have mastered the art of modern business strategy taught in the universities they could never to attend: convenient location, customer loyalty, competitive pricing and personal service.

Their targets are young workers feeling the financial pressure of mortgage payments and worries about coping with rising prices. Their targets are middle-aged people who haven't been lucky enough to secure higher-paying jobs in state-run or foreign joint-venture enterprises. Their targets are old people, frugal by upbringing and scraping along on small pensions.

In almost all neighborhoods, excluding those astronomically expensive ones, you can find cobblers, key makers, recyclers and bicycle repair stalls everywhere. Each respects the other's space, and vendors are careful not to crowd competitors. Yet there's quite a network of communication among those who sell on the street.

A cobbler, for example, would set up shop as far as possible from another cobbler, but he might direct customers to a plumber or barber friend nearby.

The unlicensed vendors spread a sense of intimacy that doesn't extend to the gleaming steel and cement commercial world surrounding them. Okay, it's true that they are often the purveyors of questionable-quality foodstuffs and pirated publications, but would society be any better off without them?

Laozi, an ancient Chinese philosopher, said more than 2,000 years ago that "the more laws and order are imposed, the more there will be thieves and robbers." A harmonious society cannot be artificially built. It arises out of a natural, human evolution. And when there is a need, a business will spring up to serve it, licensed or not.