The price of any product depends on several factors
* Cost of raw materials to make the product. Even in the USA, materials can cost more than the labor component of the products.
* Cost of labor to combine the raw materials into the product. Here products made in China, and exported to USA have lower labor costs.
* Cost of transportation … higher if made in China sold in USA or Europe … the closer the product can be made to where it is to be sold, the less cost of transporting it to market
* Cross border expenses like customs and anti-terrorism inspections holding it up in transit
* Cost of overhead. That’s like electricity, building, taxes … also cheaper in China, but insurance on transit can be higher
* Cost of capital … think of it this way … you get the raw materials & have to pay for them, usually within a month or so … the product is made which might take a week or so, sent to market which might take several months by slow boat, sold, then you get paid maybe 3 months later … this means your money is tied up in products in the slow boat pipeline, and one way or another you are paying interest on that money
* Cost of competition …some company in USA has bright idea of entering into a deal with some company in China, or India, or Mexico or wherever, to make their products for them, to save on labor costs … what’s to prevent the company in the other country to figure out how to go into competition with the original US firm & steal all their business … remember the laws are different in the other nations … you can’t enforce sophisticated contracts in an unsophisticated country
Because the price is set by the market, not the overhead. And investors take a huge profit on that.
Suppose your neighbor works in a shoe factory and makes 17 bucks an hour and has health insurance. Three years ago his cute little daughter caught meningitis and nearly died, but through the efforts of a well-stocked modern hospital she’s fine and will grow up to live a happy life. Their shoes sell for $29.95 and Buster’s shoestore downtown, who gave your son a part-time job last summer, makes $2.00 a pair. The pair you bought 3 years ago is starting to wear out.
Wal-Mart sells shoes from China. The Chinese workers live in tents and barracks and make 17 cents an hour. If their kid gets sick from pinkeye and they go home to see the kid one last time before she dies the factory manager fires them. Wal-Mart sells those shoes for $28.95 a pair and makes $28.30 a pair, which they send to their bank in Arkansas.
As a cheap, dumb American consumer, you’re going to save a buck and buy the shoes at Wal-Mart. Six months later when they wear out you’ll buy another pair at Wal-Mart because hey, it’s cheaper.
Buster’s shoe store closes and old Buster retires to Florida, and his store gets boarded up. Your neighbor gets laid off when the shoe factory closes, he moves away looking for a job and his house gets rented out to people who play the stereo real loud at night, throw trash in your yard and block your driveway with all those cars they have.
Your son lays around the house this summer and gets bored so he starts using dope he’s probably getting from those new neighbors.
As you’re taking a walk in your Wal-Mart shoes past the old Buster’s store, a huge rat runs out between the boards and you start to run, and you break your toe because this pair is worn out and you go to the emergency room and it’s three hours before you see a hospital employee because of all the gunshot cases and overdosed hopheads in there, and the next day you go back to Wal-Mart and spend another $28.95 on the third pair of shoes in 12 months. Hey, it’s a dollar cheaper.
So here you are, spending $180.00 in the time you used to spend $30.00 to keep your feet dry, getting chased by rats to a house where your son is laying around smoking crack, you can’t sleep at night for the noise, your local police are too short-handed to drive through your neighborhood, a Chinese girl is dead, a bunch of people in Arkansas are getting rich on money that used to stay your town and Rush Limbaugh is telling you this unease you are feeling is because Hilary might become President.
And you believe him because you’re a cheap, dumb American consumer saving a buck every time you buy shoes at Wal-Mart.
Have a nice day.
The investors made a huge profit.
They just share a fracrion of their labor cost down profit with end customers. they contrl the sale market.
They will not lower down their high prices unless other competitors lower down prices.
Medlar
Professional Sourcing Manager http://www.chinasourcingagent.com.cn
i think they are making huge profits. and i think their pricing is actually reactionary to what US made goods cost. they just price them lower than what US products are offered…
The price of any product depends on several factors
* Cost of raw materials to make the product. Even in the USA, materials can cost more than the labor component of the products.
* Cost of labor to combine the raw materials into the product. Here products made in China, and exported to USA have lower labor costs.
* Cost of transportation … higher if made in China sold in USA or Europe … the closer the product can be made to where it is to be sold, the less cost of transporting it to market
* Cross border expenses like customs and anti-terrorism inspections holding it up in transit
* Cost of overhead. That’s like electricity, building, taxes … also cheaper in China, but insurance on transit can be higher
* Cost of capital … think of it this way … you get the raw materials & have to pay for them, usually within a month or so … the product is made which might take a week or so, sent to market which might take several months by slow boat, sold, then you get paid maybe 3 months later … this means your money is tied up in products in the slow boat pipeline, and one way or another you are paying interest on that money
* Cost of competition …some company in USA has bright idea of entering into a deal with some company in China, or India, or Mexico or wherever, to make their products for them, to save on labor costs … what’s to prevent the company in the other country to figure out how to go into competition with the original US firm & steal all their business … remember the laws are different in the other nations … you can’t enforce sophisticated contracts in an unsophisticated country
Because the price is set by the market, not the overhead. And investors take a huge profit on that.
Suppose your neighbor works in a shoe factory and makes 17 bucks an hour and has health insurance. Three years ago his cute little daughter caught meningitis and nearly died, but through the efforts of a well-stocked modern hospital she’s fine and will grow up to live a happy life. Their shoes sell for $29.95 and Buster’s shoestore downtown, who gave your son a part-time job last summer, makes $2.00 a pair. The pair you bought 3 years ago is starting to wear out.
Wal-Mart sells shoes from China. The Chinese workers live in tents and barracks and make 17 cents an hour. If their kid gets sick from pinkeye and they go home to see the kid one last time before she dies the factory manager fires them. Wal-Mart sells those shoes for $28.95 a pair and makes $28.30 a pair, which they send to their bank in Arkansas.
As a cheap, dumb American consumer, you’re going to save a buck and buy the shoes at Wal-Mart. Six months later when they wear out you’ll buy another pair at Wal-Mart because hey, it’s cheaper.
Buster’s shoe store closes and old Buster retires to Florida, and his store gets boarded up. Your neighbor gets laid off when the shoe factory closes, he moves away looking for a job and his house gets rented out to people who play the stereo real loud at night, throw trash in your yard and block your driveway with all those cars they have.
Your son lays around the house this summer and gets bored so he starts using dope he’s probably getting from those new neighbors.
As you’re taking a walk in your Wal-Mart shoes past the old Buster’s store, a huge rat runs out between the boards and you start to run, and you break your toe because this pair is worn out and you go to the emergency room and it’s three hours before you see a hospital employee because of all the gunshot cases and overdosed hopheads in there, and the next day you go back to Wal-Mart and spend another $28.95 on the third pair of shoes in 12 months. Hey, it’s a dollar cheaper.
So here you are, spending $180.00 in the time you used to spend $30.00 to keep your feet dry, getting chased by rats to a house where your son is laying around smoking crack, you can’t sleep at night for the noise, your local police are too short-handed to drive through your neighborhood, a Chinese girl is dead, a bunch of people in Arkansas are getting rich on money that used to stay your town and Rush Limbaugh is telling you this unease you are feeling is because Hilary might become President.
And you believe him because you’re a cheap, dumb American consumer saving a buck every time you buy shoes at Wal-Mart.
Have a nice day.
The investors made a huge profit.
They just share a fracrion of their labor cost down profit with end customers. they contrl the sale market.
They will not lower down their high prices unless other competitors lower down prices.
Medlar
Professional Sourcing Manager
http://www.chinasourcingagent.com.cn
i think they are making huge profits. and i think their pricing is actually reactionary to what US made goods cost. they just price them lower than what US products are offered…
Greed.