Rishirishi wrote:
I have been involved with imports and and confirm that most Chinese brands deliberately aim for the lower end of the market and produce cheaper products by using lower cost components. In the long run, I am sure some of these brands will be able to get a better reputation and command a better price. But for now it is not like that.
the reason why made in CHina is cheaper is quite complicated.
it is wrong of you to simplify it with "using lower cost components".
In fact, the performance of Xiaomi or Huawei cellphone is even better than Sansumg,but their price is only 1/2 of 2/3 of Sansumg.
Huawei's telecom facility is also as good as Errison,but it price is also much lower than Eerrison.
China's highspeed trains is as good as Japan/france/German,if not better,but it is still cheaper than Japan/France/German highspeed trains.
many factors are combined and eventually make CHina product-cost much lower than developed countries and other developing countries,such as competely industry chains( it means low stock cost and low import cost), world-class infrastructures(it means low freight cost),pro- business administration( less business cost), disiplined and literaed workers( good productivity).
For example:
when Foxcon decided to relocate its million-jobs industry zone to ZHengzhou, a inland CHina city, the local pro-business government made land and all procedures ready in one months, and the huge new industry zone was finished from scrach in only 6 months which decreased the business cost;
years before it, thousands of expressways had been built in the province ,it made the city had world-class infrastructure,it decreased the feight cost;
after the industry zone was finished, thousands of components supplier also moved into the city with Foxcon, it decreased the stock cost;
the labour cost in the city is till lower than moderate developed economies like Taiwan,and worker here are more literated, disciplined and productitive than that in other developing countries, it decreased productive cost;
China is no longer a cheap country any more. One requires at least RMb 20K per month to lead a decent middle class life. Very different from arround year 2000, when 3-5K RMb would be sufficient. Hence Chinese companies have to move up the value chain. They can,t rely on the "simmilar quality, lower price" concept. Hence companies in China will be forced to innovate and create products that command better prices. I think the private sector will manage this fine, but public sector industry will definately have a hard time.
1. the difference between CHina in 2000 and China in 2014 is quite huge. it is even more huge than that between USA in 2014 and USA in 1934, I think.
in 2000, the house price of Beijing was just 2000-4000 RMB/per square meter
now, it is 40000RMB/square meter now ;
in 2000, the house price of countytowns here was 500-800RMB/per square meter,
now, it is 4000-6000RMB/square meter;
in 2000, the monthly salary of most CHinese was 500-1000 RMB;
now, it is 2000-5000RMB
2. in fact ,in 2000,3-5K RMB/month was enough to make one guy live a luxery life ,with dedicated nurse and housekeeper.
after all , the average month wage of CHinese was only 600RMB or so,maybe.
3. 10 years ago, many Taiwanese veterans had mainland CHina as retirement paradise , because their monthly penson was 30-70K RMB(400-800USD) and was enough to make they live a luxery retired life they could not imagined in Taiwan.
But now, even Chinese peasant workers can earn more than those Taiwanese veterans, so those Taiwanese verterans' real life quality made a dive down. many of them had to go back to Taiwan.