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Products made in China often cost more there than in theWest





mengshi200
I rember i had ever mentioned the truth of this article in forum's post.
Quote:

By David Pierson, Los Angeles Times

July 13, 2010
E-mail Print Text Size la-fi-0713-china-consumer-20100713

Reporting from Beijing

The laptop computer Luo Guangli carried out of the Apple flagship store in Beijing was no different from the models sold in the United States. It had the same high-resolution screen, an identical processor and the same printed label on the back: "Assembled in China."

The only difference besides a manual written in Chinese was the price. Luo paid $2,760. That's about $460, or 20%, more than an American buyer would spend at an Apple store or buying it online.



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"It's a huge expense, but what can I do?" said Luo, a 24-year-old professional photographer who wears glasses with Buddy Holly frames.

The premium prices aren't limited to foreign-branded computers. Kobe Bryant's Nike sneakers with the Made in China label go for $165 in the U.S. But at an official Nike store in China? $190. A flat-screen Sony TV assembled by Chinese laborers runs about $800 at a Best Buy store in the U.S. But you'd pay 30% more at the popular Chinese appliance chain Gome. The same goes for that Maclaren Techno XT infant stroller. It's also manufactured here, but you'll typically pay 40% more for one at a Beijing mall than you would in the U.S.

It's a paradox of life here in the world's factory floor. The place known for delivering low-cost goods to Western consumers doesn't always do the same for its own people.

This may have been of little consequence to economists and world leaders a few years ago. But today, getting China's consumers to open their wallets is crucial to balancing a wobbly global economy grown too dependent on American and European shoppers.

It won't be easy. Chinese households are already famously frugal and with good reason. A flimsy social safety net means tens of millions must save for their own education, healthcare and retirement. And while consumer spending has been rising along with China's prosperity, it has done so almost in spite of an economic model geared almost exclusively toward production rather than domestic consumption.

For example, U.S. manufacturers have long complained that the Chinese government keeps the value of its currency, the yuan, artificially low. That has boosted China's exports by making its goods cheap for foreigners to buy. But it also makes imported products expensive for Chinese consumers.

Then there are taxes and levies. That Apple laptop is made at a factory that's granted a rebate on China's 17% value added tax, as long as those computers are exported and sold abroad. Chinese buyers aren't so fortunate. Before that same machine can be sold domestically, it is first sent to Hong Kong, a special administrative region of China, then returned to the mainland with a 20% import tariff, industry experts said.

The price penalty is frustrating to savvy Chinese consumers who know what things cost elsewhere thanks to the Internet and their own shopping trips abroad.

"When I saw the prices at an outlet mall in New York, I thought it was crazy how much we were paying in China," said Joanna Tong, 22, a Beijing native who has vacationed in the U.S. "It's not fair. Now that I know the prices in the U.S., I've been reluctant to shop here at all."

Still, some foreign companies have made a conscious decision to raise their prices in China, or they've adopted a strategy of marketing their products as luxury items to make up for the higher cost of doing business. That might seem counterintuitive in a nation where the typical urban resident last year earned about $2,800. But high-priced goods carry cachet here, while China's consumer class is burgeoning. High prices can boost the prestige of some products while fattening the manufacturer's bottom line.

Take Budweiser. The beer that Joe Six-pack drinks in the U.S. is considered a premium brand in China. A can sells for about 25 cents more than local suds in grocery stores, even though it's brewed locally. Buick's LaCrosse sedan is seen by some here as a rival to the BMW 3-series. It's priced about 23% more than in the U.S., even though it's assembled in China by laborers earning a fraction of their U.S. counterparts. And Haagen-Dazs ice cream, a staple of U.S. convenience stores, can fetch $12 a pint in some upscale cafes in China.

"In China, people equate high prices with high quality," said Shuan Rein, managing director of China Market Research. "Brands know that if their products are too cheap it will push consumers away."

The psychology, analysts say, is about making aspiring consumers feel like they're buying a piece of the middle class. The pull can be even stronger when Chinese purchase gifts to show respect.

"If I'm buying for friends or clients, I could never buy a Chinese brand," advertising agent Liu Hao said. "It's about face."

The painstaking task of moving goods around the country is another factor driving up prices.

Logistics companies rarely consist of more than a handful of employees and a single truck, said William McCahill, vice chairman of Pacific Epoch, a Shanghai-based research firm. Freight carriers often are reluctant to cross provincial borders because of local fees, meaning that goods often have to pass from one distributor to another, depending on geography.

"There is no national logistics system," McCahill said. "Dell has a plant in Xiamen where all the suppliers have to be a bicycle ride away."

Still, there is some hopeful news for Chinese consumers. The government said last month that it would allow a more flexible exchange rate for the yuan. Trading partners hope that will lead to a stronger currency, enabling Chinese businesses and households to purchase more imported goods. And a wave of labor unrest in recent months in China has heightened calls for wage increases to boost domestic purchasing power.

"An economy with weak consumption is not sustainable," said Wang Xuanqing, a Ministry of Commerce official, at a conference of retailers last month.

In the meantime, resourceful Chinese shoppers are finding ways to skirt the higher prices.

Although knockoffs are common, the so-called gray market is also thriving, particularly online. There sellers peddle discounted luxury handbags, Apple gadgets and other authentic brand-name consumer goods acquired abroad.

"Chinese people will always want a bargain," said Wang Da, who sells Coach bags on the popular e-commerce site Taobao. "More and more people are traveling and telling their friends they can get things cheaper overseas."

Wang has a network of 30 runners who travel to the U.S., visiting California, New Jersey, Florida and other states, and bring back purses, clutches and wallets. He said almost all of these goods were manufactured in Chinese factories.

"Yes, I realize it's ironic," Wang said.

david.pierson@latimes.com

Nicole Liu and Tommy Yang in the Times' Beijing bureau contributed to this report.
http://www.latimes.com/business/la-fi-0713-china-consumer-20100713,0,1615376.story
Hogwarts
Not all that surprising, given the wealth distribution in China. You're either too poor, or too wealthy in China. I assume the price discrimination is to compensate for the lower amount of people who can afford their products over there.
deanhills
I don't think this phenomenon is unique to China however. Computers in the UAE are much more expensive than in the US. Marketing of products like Sony electronic equipment is different from region to region, including the products they market and support. Sony (as one example) usually market older products in the Middle East, which is a real irritation, as by the time one needs replacement batteries, of cause those aren't available any longer. And also come at huge costs. One can't buy any Adobe or Microsoft software online from the UAE, except MS-Office core software, and only when the place you work for has a special agreement with Microsoft in the Middle East. Etc. etc. I would imagine that marketing of brand name computers in Asia would be similar to the Middle East. Probably better to buy these products when one is in the United States, or if one can arrange a special shipping and payment through a third party. If not, one has to settle for paying a huge premium for the products in the UAE, and pay double for the popular brand software.
hunnyhiteshseth
I think that is pretty much common with every country. Each country wants to promote their exports and give special concessions to firms going for exports.
deanhills
hunnyhiteshseth wrote:
I think that is pretty much common with every country. Each country wants to promote their exports and give special concessions to firms going for exports.
Perhaps this phenomenon is more industry specific than country specific. For example, if one orders supplements from the United States, there is no difference between what people in the United States would get for the same dollars, compared with countries outside the United States. Narrowing it down even further, there could also be copyright issues involved, such as CD's, DVD's, software, etc.
hunnyhiteshseth
Yes it may be industry-specific but then whether it is industry-specific, product specific or applies to everything is dependent on about which country we are talking about.
deanhills
hunnyhiteshseth wrote:
Yes it may be industry-specific but then whether it is industry-specific, product specific or applies to everything is dependent on about which country we are talking about.
I don't agree completely. If Microsoft, or Dell, or HP has a specific marketing and sales strategy in China for example, that causes their products to sell at a greater premium in China, then it will be more expensive in China, even when China seems to be able to export its own products to the rest of the world by undercutting prices. I'm certain what does play a role is China's import duties etc. but a major factor is the marketing and sales strategy of the Brand Name importers. There are no taxes in the UAE, there are import duties, but the fact that Brand computers are so expensive here has almost 100% to do with the marketing and sales strategy of those Brand companies.
Bikerman
deanhills wrote:
There are no taxes in the UAE, there are import duties, but the fact that Brand computers are so expensive here has almost 100% to do with the marketing and sales strategy of those Brand companies.
Aside from the fact that import duties ARE taxes, the statement is incorrect. There is no income tax in the UAE but there other taxes (sales tax & corporation tax to name two).
deanhills
Bikerman wrote:
deanhills wrote:
There are no taxes in the UAE, there are import duties, but the fact that Brand computers are so expensive here has almost 100% to do with the marketing and sales strategy of those Brand companies.
Aside from the fact that import duties ARE taxes, the statement is incorrect. There is no income tax in the UAE but there other taxes (sales tax & corporation tax to name two).
Bikerman, there is no sales tax in the UAE. Where did you get that from? I understand sales tax as being that percentage that is charged in addition when one purchases goods, and there is no sales tax in the UAE. If you stay in a Hotel, there may be tourist or service charges, but that is not what I was referring to. With regard to corporation taxes, perhaps you could be right, except people don't call it taxes, more like a fee for doing business in the UAE.
Bikerman
I got it from HERE

Specifically - alcohol 30% sales tax, hotels and restaurants 5% sales tax, cigarettes unspecified sales tax.
Corporation tax 20% for foreign banks and 55% for foreign oil companies.
harismushtaq
Bikerman and deanhills, you two have gon a bit of the topic and my opinion about your NEW debate is that wheather UAE has taxes or not, life there is very expensive to live.

And about the main topic, there are two separate things. One is research and manufacturing which is very cheap in China and skills and labour is plenty. This makes it easy for from small lacal ventures to large multinational companies to get thier goods manufactured there. China is now also becoming a good consumer market as more and more people are getting jobs/business and buying power is increasing. When this happens, commodities emerge for each sector. Apple is selling its computers at the price because there are people to buy them. There are cheaper products as well. The fame of chine is not for what you can buy off the shelf in the market there. It is what its industrial capacity offers for firms looking for goods to be manufactured. My opinion only.
deanhills
harismushtaq wrote:
Bikerman and deanhills, you two have gon a bit of the topic and my opinion about your NEW debate is that wheather UAE has taxes or not, life there is very expensive to live.
Apologies for the distraction Harismushtaq.

harismushtaq wrote:
And about the main topic, there are two separate things. One is research and manufacturing which is very cheap in China and skills and labour is plenty. This makes it easy for from small lacal ventures to large multinational companies to get thier goods manufactured there. China is now also becoming a good consumer market as more and more people are getting jobs/business and buying power is increasing. When this happens, commodities emerge for each sector. Apple is selling its computers at the price because there are people to buy them. There are cheaper products as well. The fame of chine is not for what you can buy off the shelf in the market there. It is what its industrial capacity offers for firms looking for goods to be manufactured. My opinion only.
Not sure I understand what you are saying. I get it that research and manufacturing are low cost in China. Also that there is a good consumer market and people who are interested in buying Apple Macs. But the thread started with the argument that Apple was unrealistically expensive in China. And that it is ironic that it could have been manufactured in China to start off with? And that people in the US are paying less for the Apple computer (that could have been manufactured in China to start off with) than people in China are. Perhaps Chinese need to call Apple on that one, as Apple is only getting away with it, because people in China are allowing them to. Ditto in other countries as well such as in the Middle East.
toasterintheoven
The idea is, when you find a place to get outlet items in China, make sure it's stuff that's made in China, for instance, laptops aren't made in China, but a lot of brand-clothings are, and you can usually bargain them down to some very nice prices, just keep haggling with the seller, the longer and harder you push, the lower you'll be able to talk the price down.
deanhills
toasterintheoven wrote:
The idea is, when you find a place to get outlet items in China, make sure it's stuff that's made in China, for instance, laptops aren't made in China, ...
Good point, and I now have a question. Why can't China manufacture its own equivalent of Apple Mac? Surely with its technology, it could do the same, if not better than the Apple Mac? Or is there a status symbol attached to owning an Apple Mac in China?
coolclay
I often have trouble comprehending the social and economical workings of China because they are so foreign and different than anything here in the US. I am sure a lot of it has to do with the value of then Yuan, but you would still think that prices for things made there would be more reasonable. I totally believe the more it costs the more I need it (status symbol) philosophy that is such a staple at this time in China's development. But still everyday something new I learn about China confuses the hell out of me.

For example last week I purchased a very nice 3 ply screen protector for my GPS from Hong Kong. Now here in the US it would have cost maybe $5 or so, but I payed 6 cents for it! And not just 6 cents for the screen protector but 6 cents for the padded envelope it came with, the shipping from HK to California, and the screen protector! I mean something doesn't add up here, someone is losing money, or something.

I have a friend who works in the textile industry in China, she does quite well for herself given the circumstances but some of the stories she tells me are insane! They are literally brainwashed and take everything the government tells them as gold.
deanhills
coolclay wrote:
I have a friend who works in the textile industry in China, she does quite well for herself given the circumstances but some of the stories she tells me are insane! They are literally brainwashed and take everything the government tells them as gold.
I think all of us are brainwashed everywhere. Only difference with China is maybe we don't believe everything what the government tells us. But in the end it is still the same result. As we will never know what the truth is. Same lies, same deception, just different format. Less freedom of speech, less freedom of movement. Thinking about it, much too little freedom of speech, I'd never be able to live with that. Smile
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