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Why Is "Made In China" Cheaper Outside China?

2010/12/14 17:29:00 93

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With the coming of Christmas and new year, Chinese tourists' outbound travel and shopping increase greatly.

An important reason is that many of the same goods are cheaper overseas than the mainland.

In fact, the "made in China" goods generally exist in the territory.

A pair of Nike or

Adidas

The price of Chinese tourist shoes is seven hundred or eight hundred or even thousands of dollars.

The shoes of the same style only cost US $thirty or forty in some big stores in the United States, which is equivalent to RMB two hundred or three hundred yuan.

Take the electronic products as an example, the IPAD of 16G assembled in Shenzhen, Guangdong, was quoted at the beginning of the market in the United States at 499 US dollars (equivalent to about 3300 yuan), and Hongkong quoted 3888 Hong Kong dollars (equivalent to about 3300 yuan). After about one year in the United States, IPAD was finally landed in mainland China, but its 16G version was priced at 3988 yuan, which was 688 yuan higher than Taiwan and the price was 21% higher.

If we consider the income gap at home and abroad, the difference between them will be even greater.

According to statistics released by the International Monetary Fund (IMF) in April 2010, China's per capita GDP in 2009 was 3678 dollars, ranking 100 in the world, while the United States ranked ninth in terms of 46381 US dollars, about 13 times that of China.

That is to say, the same way to buy IPAD is that the Chinese people pay more than 20% of the money than the Americans, and the income is only 1/13 of the family! This kind of price difference not only causes the trend of professionalism of the water users, but also makes more and more Chinese people buy all kinds of "MADE IN CHINA" products abroad from abroad.

Theoretically, the same commodity produced in China is located in China.

Market sales

Compared with the western developed countries, the market price should be lower, and the selling price should be low.

Why is "made in China" cheaper outside China?

China, as a developing country, now produces a large quantity of goods abroad as a "low-end goods" into the retail terminal.

The lack of well-known brands, mainly for the OEM production of others, makes the price of "made in China" low.

This is a reason related to the development stage of China.

Chinese commodities

Exit

Tax rebates constitute a direct cause for the price of export commodities below domestic prices.

As China has comparative advantages in processing and assembly, in order to stimulate economic growth and solve employment problems, China has formulated a tax rebate policy for export promotion.

That is, the export tax rebate policy has become the source of profits for many foreign trade enterprises. With the intensification of competition in the international market, the profits of foreign trade enterprises have been squeezed repeatedly. Many manufacturing enterprises do not make money or even pay for orders, and the export tax rebate part has become an important part of their earning a small profit or even recovering their losses.

Take iPhone as an example, a foundry in the United States sells for iPhone of $499, and OEM enterprises get about $4, including wages and amortization of fixed assets.

The export tax rebates for Chinese products not only provide subsidies to the developed countries in Europe and the United States, but also maintain their high level of consumption, and directly constitute the reason why the prices of export commodities are lower than domestic ones: reducing the value added tax by 17% can at least reduce the export prices by 17%.

Market competition in developed countries is fierce. European, American and Japanese brands compete with each other. Many brands have been operating for hundreds of years or even hundreds of years, with relatively fixed customer groups.

In such a market environment, the high price strategy will not work if we want to win new customers.

Moreover, the logistics system of developed countries is relatively perfect, many brands are sold directly in discount stores and direct selling stores, and the sales network is developed, and the intermediate cost of circulation links is low.

A number of goods produced by China also need to pay customs duties, value-added tax and consumption tax when they are exported back to China.

For example, clothing and cosmetics tariffs are generally between 20%-50%, plus 17% VAT and tax rates, which will undoubtedly increase the price.

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The high circulation cost in the domestic market has raised the price of commodities.

The high cost of domestic circulation is a chronic disease that has been criticized for a long time.

The establishment of China's sales network is not yet perfect, and the cost of entering the distribution network is very high.

A commodity enters the sales terminal. Besides pportation costs, there are also high entry fees, booth fees, shelves fees and festival fees.

As well as agents at different levels, agents at all levels will be able to deduct a certain proportion of profits and rebates from their sales volume, and even have public relations costs to the relevant government departments.

And "wool on sheep", these costs are ultimately reflected in the price tag of products and consumers to "pay", sales prices naturally low.

According to incomplete statistics, China's domestic commodity logistics cost accounted for 20% - 40% of the price, while the high cost of manpower in the United States, this data remained largely in the range of 11.4% - 11.7% in 1990s.

In the ten years after this century, especially in the first two years of this century, it dropped to about 10%, or even dropped to 8.7% in 2002.

The cost of grey system is too high.

This is the institutional cause of "making in China" cheap and expensive.

The opaque, irregular and unreasonable domestic market has led to high paction costs and system operation costs.

Railways, highways and air pport have not been fully marketed, and the logistics system is of high quality and high price.

Due to overloading of railway freight in mainland China, the additional cost of freight pportation is between five thousand and fifty thousand yuan, and pportation is not cheap.

According to statistics, in China, the total logistics cost of the whole society accounts for about 21.3% of GDP, while that of developed countries is about 10%.

The price of "made in China" products is higher than that of foreign countries, and the other reason is that international brands firmly hold the right to speak and pricing power, and our own brand products have not yet formed the strength to compete with them.

The "made in China" brand for international brand OEM can not be sold at high prices abroad, but in the domestic market, it is in the high-end market because of its brand.

Because the competitiveness of China's domestic brands is not enough, the brand has not been set up, resulting in a few international brands monopolizing high-end products. Therefore, the pricing of multinational enterprises in mainland China is high, and profits are high.

It can be seen from this analysis that in fact, "made in China" is the same as domestic sales or foreign sales.

The reason why the price is expensive is that the gap lies in the circulation and business system.

If we can deepen the reform in this area, the phenomenon that the Chinese will buy "made in China" overseas will gradually decrease, and the phenomenon of water customers will not overflow like this now, and it can also effectively expand the domestic consumption market.