Author Topic: Why is Shenzhen the king of cheap?  (Read 6261 times)

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Offline HalFET

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Re: Why is Shenzhen the king of cheap?
« Reply #25 on: February 21, 2019, 08:14:24 pm »
Honestly, if price is 10 times lower than from reputable source, most likely it is counterfeit or salvaged crap. Also it's good to google "counterfeit DS1307" or "counterfeit LM2596" to realize there ain't free lunch when buying cheap modules/parts.
Now I'm curious, what do you use as point to set your reputable source price? I'm not talking about purchasing fifty or even a thousand components, so basing yourself on Farnell pricing for that one is ludicrous. Component purchasing in volume is already pretty much the wild west as far as pricing goes.

If you go to somewhat reputable source in China, component price won't be that much different.
Yeah, it does differ quite a bit, less administrative and logistics costs.
 

Offline james_s

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Re: Why is Shenzhen the king of cheap?
« Reply #26 on: February 21, 2019, 09:18:42 pm »
My experience has been a mixed bag. Some of the very cheap parts out of China are great, either genuine or clones that are as far as I can tell bang on. Other stuff not so much, every Dallas battery backed RAM I've tried is either a re-marked pull or an obvious counterfeit confirmed by X-ray. One of the re-marked parts actually came with data on it, 3 out of 4 counterfeit parts were faulty in various ways. All sold as new genuine parts. In at least one other event I wasted a considerable amount of time trying to debug a project before I realized the IC was not what it was labeled as. Another time I bought some EEPROMS that turned out to be obsolete mask ROMs.

I still buy certain types of parts this way but one does need to be vigilant. Some types of parts like those Dallas SRAMs and a lot of more esoteric transistors are fakes. Other parts are used pulls that have been blacktopped and sold as new. The annoying thing is I would buy an aftermarket compatible battery SRAM or or some other used part assuming it actually works, but when I buy something presented as new genuine I feel cheated if it turns out to be something else.
 

Offline HalFET

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Re: Why is Shenzhen the king of cheap?
« Reply #27 on: February 22, 2019, 04:30:07 pm »
My experience has been a mixed bag. Some of the very cheap parts out of China are great, either genuine or clones that are as far as I can tell bang on. Other stuff not so much, every Dallas battery backed RAM I've tried is either a re-marked pull or an obvious counterfeit confirmed by X-ray. One of the re-marked parts actually came with data on it, 3 out of 4 counterfeit parts were faulty in various ways. All sold as new genuine parts. In at least one other event I wasted a considerable amount of time trying to debug a project before I realized the IC was not what it was labeled as. Another time I bought some EEPROMS that turned out to be obsolete mask ROMs.

I still buy certain types of parts this way but one does need to be vigilant. Some types of parts like those Dallas SRAMs and a lot of more esoteric transistors are fakes. Other parts are used pulls that have been blacktopped and sold as new. The annoying thing is I would buy an aftermarket compatible battery SRAM or or some other used part assuming it actually works, but when I buy something presented as new genuine I feel cheated if it turns out to be something else.
Where did you get them though? I find that most of the folks complaining about this are talking about shady ebay sellers or alibaba.
 

Offline james_s

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Re: Why is Shenzhen the king of cheap?
« Reply #28 on: February 22, 2019, 06:29:24 pm »
Where did you get them though? I find that most of the folks complaining about this are talking about shady ebay sellers or alibaba.


Yes, where else do you get ridiculously cheap components and modules from China? Cheap parts from ebay, aliexpress, etc is what this thread is about.
 

Offline HalFET

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Re: Why is Shenzhen the king of cheap?
« Reply #29 on: February 22, 2019, 08:04:08 pm »
Yes, where else do you get ridiculously cheap components and modules from China? Cheap parts from ebay, aliexpress, etc is what this thread is about.
Uhm, I buy them from professional component distributors. If you have a bit of a working relationship with them they'll also ship you smaller quantities. Never really buy the small modules, so can't help you there. Smallest "modules" I've bought on Aliexpress were FPGA boards.
 

Offline janoc

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Re: Why is Shenzhen the king of cheap?
« Reply #30 on: February 22, 2019, 08:59:47 pm »
Where did you get them though? I find that most of the folks complaining about this are talking about shady ebay sellers or alibaba.


Yes, where else do you get ridiculously cheap components and modules from China? Cheap parts from ebay, aliexpress, etc is what this thread is about.

I thought the thread was about Shenzhen being cheap, not eBay, Aliexpress and Alibaba sellers? Pretty much all of the latter get their wares from Shenzhen but Shenzhen is not only these mom-and-pop fly-by-night sellers! There are tons of actual component distributors, part vendors, PCB manufacturers and what not which serve the local electronic industry. And it is possible to actually go there and order things from them - and you will get good quality goods. I think that's what HalFET was talking about.

So just because you got ripped off by a dodgy seller that buys whatever they found on discount in one of the Shenzhen markets today and then resells it on eBay or AliExpress, it doesn't mean that that is all that's available there.
« Last Edit: February 23, 2019, 11:23:38 am by janoc »
 
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Offline james_s

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Re: Why is Shenzhen the king of cheap?
« Reply #31 on: February 23, 2019, 12:51:14 am »
The thread that started this post "I saw some crowd selling 20 ds1307 breakout boards on banggood for $12. How do they do it? I can't buy 20 ds1307's for $12 not to mind add a crystal and put a PCB under it."

Reputable OEM component sellers are not going to sell 20 DS1307 breakout boards for $20. Just because the title of the thread has the word "Shenzhen" in it doesn't mean he's asking about the entire city. He is obviously talking about Banggood and similar sellers of insanely cheap components and breakout boards.
 

Online Siwastaja

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Re: Why is Shenzhen the king of cheap?
« Reply #32 on: February 23, 2019, 09:34:26 am »
Reputable OEM component sellers are not going to sell 20 DS1307 breakout boards for $20.

The question was how the low end price is possible. The answer lies in the manufacturing of said products, and their component sourcing, which is being discussed right now.

A reputable component seller might sell 2000000 DS1307 ICs to a manufacturer who uses it in a mass product, is then left with 20000 parts in excess, and then uses a cheap Shenzhen PCB fab that manufactures and assembles the modules for a few cents each, then sell them on Banggood. All this would usually go through various steps inbetween; you'd either lose traceability or you won't, but for the end customer, a hobbyist buying a cheap module, it doesn't usually matter.

The key thing to understand is that component pricing is arbitrary, and given enough volume and the right contacts, it can easily go down by 90% from what you see on Digikey for 20pcs, and this doesn't necessarily mean compromising the traceability. OTOH, almost anything is possible, so this is just speculation. You can't know from the price alone whether they are fakes or not. Some are, some are not.

It's fairly common to see this discussion happening: if an IC costs, say, $5 at qty 10 on Digikey, or $2 at qty @10000 at Digikey, how a finished module can cost "only $1" on Ebay - "it must be fake".

But, this doesn't take into account for a few facts:
* A typical markup on the Digikey seems to be around 3x, even for large volumes - hence, from directly sourcing from the manufacturer at large qty, it's well possible the "$2" price is down to around 50-70 cents.
* The assumption that a few support components (a few resistors, capacitors, a connector) are expensive is often wrong by x100. Even brand resistors and chipcaps on DK cost something like $0.002 each. In volume, local Chinese brands, it's evel less.
* The assumption that PCB manufacture and assembly is expensive, is clearly wrong. A small module can be fabricated and assembled for a few cents. This is because the highly automated process. A PCB panel can hold thousands of module PCBs because they are so small, and a modern P&P machine can populate large panels at a pace of, say, 1 second per module.
* The shipping costs can be surprisingly low when one ships hundreds of thousands of small packets from China or HK. The real cost happens at the delivery, in the receiving country, and the real cost is spread across the customers of the postal services of the receiving country. This isn't fair, but it's the reality.

So, for a "typical" $1 module that contains a "$2 part", the cost might actually spread down like this:
* The $2 part, actually, in volumes: $0.50
* Support components: $0.05
* PCB manufacturing: $0.05
* PCB assembly: $0.05
* Testing: $0.00 - no testing
* Packaging: $0.05
* Worldwide shipping: $0.15
* Ebay/Paypal/Ali cost: $0.05
* Profit: $0.10

If a counterfeit part exists, and if it is significantly cheaper, you can of course push that profit margin up. But, a counterfeit is not always available at all, or the actual manufacturer is actually competiting on the Chinese market (because that's a huge market opportunity - only working with lawsuits against fakes won't work - it's better to sell your good stuff for good price, compromising on your profit margin!) and selling the genuine chips for affordable price.
« Last Edit: February 23, 2019, 09:59:09 am by Siwastaja »
 
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Offline HalFET

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Re: Why is Shenzhen the king of cheap?
« Reply #33 on: February 23, 2019, 01:59:11 pm »
The thread that started this post "I saw some crowd selling 20 ds1307 breakout boards on banggood for $12. How do they do it? I can't buy 20 ds1307's for $12 not to mind add a crystal and put a PCB under it."

Reputable OEM component sellers are not going to sell 20 DS1307 breakout boards for $20. Just because the title of the thread has the word "Shenzhen" in it doesn't mean he's asking about the entire city. He is obviously talking about Banggood and similar sellers of insanely cheap components and breakout boards.
Uhm, yeah they will and do. You honestly are making assumptions based on low volume production with EU or US-Canadian prices.

To put it in terms you might understand, say someone like Sparkfun orders 10k breakout boards, odds are the manufacturer is going to make 12k on the assumption that Sparkfun is probably going to order more in the short term. Pretty much all PCB manufacturers will over-produce on large orders to cover yield loss and follow-up orders. If they don't order them by a certain date they'll either dispose of them (in the case of more complex boards) or just sell it off. Now you might go "see, they're selling my design!", but keep in mind such breakout boards are rarely - if ever - designed by the company selling them. Usually it's a small team of designers at the PCB manufacturer who does this, so you're basically ordering the final product, not a specific design. Since design and manufacturing expenses were already covered by the initial order, the manufacturer can increase their profit margin by selling these things at a low price.
 

Offline madires

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Re: Why is Shenzhen the king of cheap?
« Reply #34 on: February 23, 2019, 02:30:44 pm »
I'm buying only genuine Chinese parts from China. ;D Works well for semiconductors since there isn't much profit in counterfeiting inexpensive parts already made in China. Bird seed (caps and resistors) can be problematic, especially when too cheap. Also be cautious about the quality of electromechanical stuff like plugs and connectors.
 

Offline wraper

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Re: Why is Shenzhen the king of cheap?
« Reply #35 on: February 23, 2019, 02:32:52 pm »
It's fairly common to see this discussion happening: if an IC costs, say, $5 at qty 10 on Digikey, or $2 at qty @10000 at Digikey, how a finished module can cost "only $1" on Ebay - "it must be fake".
Because it is in 99% of cases  :palm:
 

Offline wraper

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Re: Why is Shenzhen the king of cheap?
« Reply #36 on: February 23, 2019, 02:34:54 pm »
I'm buying only genuine Chinese parts from China. ;D Works well for semiconductors since there isn't much profit in counterfeiting inexpensive parts already made in China. Bird seed (caps and resistors) can be problematic, especially when too cheap. Also be cautious about the quality of electromechanical stuff like plugs and connectors.
Really? How about ebay/ali full of fake fake LM358 which you can buy genuine for <10 cents/piece QTY of 100 from reputable distributor?
« Last Edit: February 23, 2019, 02:37:34 pm by wraper »
 


Offline janoc

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Re: Why is Shenzhen the king of cheap?
« Reply #38 on: February 23, 2019, 02:55:54 pm »
I'm buying only genuine Chinese parts from China. ;D Works well for semiconductors since there isn't much profit in counterfeiting inexpensive parts already made in China. Bird seed (caps and resistors) can be problematic, especially when too cheap. Also be cautious about the quality of electromechanical stuff like plugs and connectors.
Really? How about ebay/ali full of fake fake LM358 which you can buy genuine for <10 cents/piece QTY of 100 from reputable distributor?

And why are you buying fake crap from eBay? Nobody is disputing that it exists, so I don't see why so many people have the need to point at junk being sold by eBay sellers that no serious person would buy and expect genuine stuff.

The point is that this does not mean that everything being sold from Shenzhen is fake only because it is cheap or comes from Shenzhen!  Ever heard about an implication and its converse? (aka that A => B being true does not mean that B => A is!).

With Asian suppliers (not only Chinese) cultivating personal contact and business relationship is the key. Do your due diligence, vet your suppliers and you can get products of decent quality and cheaply, assuming you are being reasonable with your expectations (and order in quantity). Or, if you don't have time or resources for it (which is completely OK!), rely on the major suppliers like Digikey or Farnell to do it for you. But then don't complain about the prices or assume that anyone selling cheaper has to be selling counterfeits only because they don't have the same overhead. That service costs something - in Western wages. And even then you can get dodgy or outright counterfeit parts on occasion.

These claims about things that must be fake only because they are cheap while neglecting the vastly different supply chain and resources available in China (labor costs, various environmental regulations, loads of manufacturing capacity) vs. what we have in the EU and generalizing from junk sold by mom-and-pop stores on eBay in single quantities is being really ignorant.
« Last Edit: February 23, 2019, 02:59:37 pm by janoc »
 

Offline wraper

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Re: Why is Shenzhen the king of cheap?
« Reply #39 on: February 23, 2019, 02:59:52 pm »
And why are you buying fake crap from eBay? Nobody is disputing that it exists, so I don't see why so many people have the need to point at junk being sold by eBay sellers that no serious person would buy and expect genuine stuff.
I don't intentionally buy fake crap. Occasionally I buy parts from there for different reasons, not ultra cheap and still often get some sort of crap. I see that, because I inspect the parts meticulously. The point is, most of those stupid buyers think it's a real deal when part/module is sold for 10x less.
Quote
The point is that this does not mean that everything being sold from Shenzhen is fake only because it is cheap or comes from Shenzhen!  Ever heard about an implication and its converse? (aka that A => B being true does not mean that B => A is!).
The point is, if it's 10 times cheaper, there is 99% chance there is something fishy with that part.
« Last Edit: February 23, 2019, 03:07:48 pm by wraper »
 

Offline wraper

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Re: Why is Shenzhen the king of cheap?
« Reply #40 on: February 23, 2019, 03:09:36 pm »
These claims about things that must be fake only because they are cheap while neglecting the vastly different supply chain and resources available in China (labor costs, various environmental regulations, loads of manufacturing capacity) vs. what we have in the EU and generalizing from junk sold by mom-and-pop stores on eBay in single quantities is being really ignorant.
Quote from a Chinese person who knows better what's going on there:
The only magic in China is that you can buy 1 off parts at 1kpcs price. Nothing more. If you see an AliExpress seller sells a $10@1kpcs part for $1, then it is bound to be fake.
Paying a genuine price usually gets you genuine parts, but there are exceptions. Rarely, but it happens, that an unethical seller will sell you fake parts even if you paid the genuine price.
In China, there is a special job called purchasing engineer, this job does this thing -- to save cost from buying from a reputable distributor, while trying to avoid getting fake parts from gray market.
 

Offline madires

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Re: Why is Shenzhen the king of cheap?
« Reply #41 on: February 23, 2019, 03:11:27 pm »
I'm buying only genuine Chinese parts from China. ;D Works well for semiconductors since there isn't much profit in counterfeiting inexpensive parts already made in China.
Really? How about ebay/ali full of fake fake LM358 which you can buy genuine for <10 cents/piece QTY of 100 from reputable distributor?

I was talking about genuine Chinese parts from Chinese manufacturers. If I need an LM358 from TI, ST and so on I'll source it from one of the large distributors.
 

Online Siwastaja

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Re: Why is Shenzhen the king of cheap?
« Reply #42 on: February 23, 2019, 04:08:28 pm »
One further issue is that you can't get a genuine distributor price for high volumes without requesting a quote manually (for which you need to have an actual business relationship with them). Of course, everyone can see a price for 100000pcs at Digikey or Mouser, but it tends to be saturated at nearly the same price it is for 1000pcs, and they even hint about requesting a quote to get the real price.
 

Offline HalFET

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Re: Why is Shenzhen the king of cheap?
« Reply #43 on: February 23, 2019, 09:48:24 pm »
I don't intentionally buy fake crap. Occasionally I buy parts from there for different reasons, not ultra cheap and still often get some sort of crap. I see that, because I inspect the parts meticulously. The point is, most of those stupid buyers think it's a real deal when part/module is sold for 10x less.
Don't buy components of ebay, period. You pretty much always get ripped off, even if it's expensive and not from China. Most of us learn that after the third order.

The point is, if it's 10 times cheaper, there is 99% chance there is something fishy with that part.
Depends, having seen volume pricing for genuine parts straight from the manufacturer I can say this statement is BS.

These claims about things that must be fake only because they are cheap while neglecting the vastly different supply chain and resources available in China (labor costs, various environmental regulations, loads of manufacturing capacity) vs. what we have in the EU and generalizing from junk sold by mom-and-pop stores on eBay in single quantities is being really ignorant.
Quote from a Chinese person who knows better what's going on there:
The only magic in China is that you can buy 1 off parts at 1kpcs price. Nothing more. If you see an AliExpress seller sells a $10@1kpcs part for $1, then it is bound to be fake.
Paying a genuine price usually gets you genuine parts, but there are exceptions. Rarely, but it happens, that an unethical seller will sell you fake parts even if you paid the genuine price.
In China, there is a special job called purchasing engineer, this job does this thing -- to save cost from buying from a reputable distributor, while trying to avoid getting fake parts from gray market.
Again, you got to know where you order. Another point is availability, some parts are simply not being shipped in small volume in Europe or US markets. For example, the SiLabs DAB+ parts, half of them aren't even available through Digikey, Mouser, Farnell, etc. in small quantities. You can luckily still find them in small quantities from Chinese distributors, so you can actually prototype without having to put down a few thousand EUR/USD to get your hands on a few chips.
« Last Edit: February 23, 2019, 10:16:20 pm by HalFET »
 
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Offline aqarwaen

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Re: Why is Shenzhen the king of cheap?
« Reply #44 on: February 23, 2019, 10:07:25 pm »
BS, most of the well known brand parts are more expensive than at Mouser or Farnell, except passives. But then you also have TME with cheap passives.
I said non-Chinese brands, not western brands. I'm talking about the Japanese and Korean stuff, for example u.fl connectors (genuine hirose ones) cost 1/5 the price compared to digikey, surface mount TCXOs, SAW filters, and other precision components that are too low margin for the western manufacturers to care about but still don't yet have local alternatives.

i have one  friend who used to work,in company who claimed to their customers that they use only geniue parts,but actually used cheap clones.and they clones even had same exact name..thats was also reason why he leaved that company and his work..it was very long time ago..
 

Offline wraper

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Re: Why is Shenzhen the king of cheap?
« Reply #45 on: February 23, 2019, 10:19:14 pm »
I don't intentionally buy fake crap. Occasionally I buy parts from there for different reasons, not ultra cheap and still often get some sort of crap. I see that, because I inspect the parts meticulously. The point is, most of those stupid buyers think it's a real deal when part/module is sold for 10x less.
Don't buy components of ebay, period. You pretty much always get ripped off, even if it's expensive and not from China. Most of us learn that after the third order.
It amounts to less than 0.1% of total cost of components I buy. Sometimes you simply cannot buy from reputable source. Usually it is something not stocked by western distributors, too expensive to ship for one off and similar. Also I suggested to not buy there just a few posts ago.
Quote
The point is, if it's 10 times cheaper, there is 99% chance there is something fishy with that part.
Depends, having seen volume pricing for genuine parts straight from the manufacturer I can say this statement is BS.
Now you talk about volume pricing directly from manufacturer  :palm:.
« Last Edit: February 23, 2019, 10:24:21 pm by wraper »
 

Offline HalFET

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Re: Why is Shenzhen the king of cheap?
« Reply #46 on: February 24, 2019, 12:03:56 am »
Now you talk about volume pricing directly from manufacturer  :palm:.
Well, then start defining what you mean by price point. Because guess what, the original manufacturer's volume price is the lowest price you can find under normal conditions. If it'd be under that price point I'd agree, it might be a fake. But it might also simply be left-over stock that's being sold off below market value to recuperate costs. But I've never seen the reputable Chinese distributors go below the price point of the manufacturer for large volume sales. And the price point that manufacturers will sell at when you order a million components gets rather interesting, maybe someone here actually has quotations that they are allowed to share? But I can tell you that diving sub-10% from the price on Digikey is perfectly doable for parts like DC-DC converters, LED drivers and application specific MCUs from some of the large manufacturers. You honestly need to stop confusing a guy selling stuff on ebay out of his apartment with a proper distributor.
 

Online Siwastaja

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Re: Why is Shenzhen the king of cheap?
« Reply #47 on: February 24, 2019, 07:45:21 am »
Now you talk about volume pricing directly from manufacturer  :palm:.

That was completely spot-on on-topic (as an explanation what these module manufacturers can do to push their end product price down: for example, buy in volume from the manufacturer!), until you started shifting goalposts to have a completely unnecessary internet forum fight  |O. Would you please just stop, you can do better, and usually do. Thanks.
« Last Edit: February 24, 2019, 07:47:03 am by Siwastaja »
 

Offline olkipukki

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Re: Why is Shenzhen the king of cheap?
« Reply #48 on: February 24, 2019, 09:08:26 am »
I saw some crowd selling 20 ds1307 breakout boards on banggood for $12. How do they do it? I can't buy 20 ds1307's for $12 not to mind add a crystal and put a PCB under it.


Why not?  :o
Actually, you can buy almost 30 pcs for $12 (exclude delivery) that approx 3 times cheaper than buy directly from Maxim in 1000pcs :wtf:

The devil hides in details  >:D



 
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Offline nick_d

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Re: Why is Shenzhen the king of cheap?
« Reply #49 on: February 24, 2019, 10:24:36 am »
Disregarding the ebay / ali fake market for a moment and just talking about Shenzhen, well from what I understand Shenzhen is a "special economic zone" which means that ordinary capitalistic policies apply, unlike in other parts of China where state owned enterprises are still quite big and it can be hard to get permission to run a normal business, as well as having to deal with taxes and bribery etc. In effect you could consider Shenzhen like China's "duty free store" -- in the sense that countries lose no tax revenue by offering duty free purchases to travellers who are going to a lower taxing jurisdiction anyway and clearly wouldn't buy the local stuff unless they were offered some sort of inducement. The special position occupied by Shenzhen and other special economic zones is kind of like Hong Kong used to be, except that Hong Kong is getting more heavily regulated these days. Probably that's for political reasons, since Hong Kong-ese have had a taste of freedom and would like it back.

And, why do ordinary capitalistic policies result in much lower prices for everything? Simply that, in the 20th and 21st century in Western countries we have not had ordinary capitalistic policies, we've had a so-called mixed economy where there is lots of central planning (consider AmTrak for instance, compared with the 19th century way where different railroads actually competed with each other), there are extremely high taxes by historic standards, minimum wages, and many employee-friendly but business-hurting policies (401k, paid holiday leave, medical insurance and so forth). Furthermore everything is tightly regulated, less so in the electronics and IT industries, but it still hurts innovation, for instance you cannot enter the PSU market unless you're willing to pay for a $50,000 fee for testing, so you need really high volumes and deep pockets right out of the gate.

Another thing to consider is the double, triple, quadruple, ... dipping indulged in by Western governments. You get paid, and 30-40% of it goes in income tax, but now when you buy something there is sales tax, and if for instance it's fuel there is fuel excise... and now suppose you pay your mobile phone bill with the money that's already income taxed, well 75% of that money goes straight to the spectrum pricing doesn't it. And the same applies to everything you buy. In the case of companies trading with each other, if 100 companies contribute to your cup of coffee (one makes cardboard, another makes glue, another grows beans, another buys and roasts them, another buys and imports, ...) then EACH of those companies must pay company tax, admittedly this is only applied to profits but they could take much less profits if not taxed.

Given the situation in China where the Government more or less gets out of the way and allows manufacturing to happen as cheaply as possible (since it benefits the bigwigs to have the resulting foreign exchange flow into the country), and the domestic market is not so over-taxed and over-regulated that basic staples like rice cost a fortune like they do here... the Chinese are able to produce things AT THE PRICE THAT THEY WOULD BE PRODUCED HERE IF GOVERNMENT WOULD GET OUT OF THE WAY. The free market price is literally 10s or 100s of times less than the actual price seen in Western democracies, because of the double, triple, quadruple, ... dipping phenomenon and all the business hurting regulation. It's really only the politicians and those whose pension funds are invested in the incumbent, inefficient industrial concerns that benefit from such policies.

cheers, Nick

edit: change unpaid to paid holiday leave, typo
 


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