
My school is situated in a former village, now suburb of Shanghai. It's nice and quiet there, the streets lined with trees, houses at max 2 stories high, foodstalls, and massage places. Lots of them, and, as common in China, they do not only offer massage. In fact, it's apparently all up to the price - the more you pay, the more you get.

I have no 'inside' experience with any this (well, full disclosure, I took an ordinary massage once in Beijing) but these places are anywhere and people (mostly men, that is) openly talk about them. It seems to be a big part of everyday life. In fact, a friend told me once, that in a Chinese city the local government started cracking down on prostitution once, only to find out that a major part of their tax revenue came from prostitutes - so they eventually withdrew for fear of cutting their funding.

One reason for why there are so many prostitutes is, of course, that these women are not locals, but, in a way just like construction workers in the major cities, migrant workers, trying to survive. They are the 'supply-side' for the demand of many newly rich Chinese, being able to afford such services, in a culture that increasingly is becoming sexual. The tabloids, the women's magazines, the Western ideal of beauty (i.e. being sexy), the clubs and bars, they all are part of the whole-sale transformation of Chinese culture from conservative to consumptive. The demand is growing.
In the interstices of this process Westerners can find odd phenomena. For instance, the abundant sex-shops euphemistically often call themselves 'stores dedicated to men's health' because, officially, they are prohibited. And, be sure, you won't just get traditional tiger-testicles in there. Another oddity is the absence of a clear separation between beauty service (be it massage, or just a haircut) and plain sex. In many places there are no clear boundaries between being a hairstylist or a masseuse, and a prostitute (I mention hairstylist, because in some cities hairdressing places are infamous for being secret brothels - my hairdresser is not though, I am sure). I hear, in fancier massage places, 100 kuai (10 Euros) for a massage by a guy, 200 for a massage by a girl, 300 for an oil massage, 400 for an oil massage with her 'giving you the hand', and 500 for, well, the whole deal. In Europe we have a legal as well as a strong moral threshold defining which service dedicated to the customer's body is fine, and which one is not. That threshold is not (yet) distinct here in China. And so, all people need to do to set up a brothel is to dress it up as a massage place - ensconcing it with an air of legality.