General > General Technical Chat

How do chinese sellers make money

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peter-h:
I don't know the answers to the OP's specific examples, but let me make some general points:

This is the #1 factor. In the 1st world, everybody is trying to climb the ladder to having a big 4x4 parked outside (1 for the man, 1 for the woman, and the 2nd one needs to be a T80 tank for the school run which is extremely hazardous to the kids). Houses cost a fortune and most people and not paid off for 30 years. Mountain bikes cost 4k (2k before covid). And so on. Life is expensive and "life ambitions" are extremely high.
In China most factory workers do not (yet) have these expectations, so the ecosystem there caters for people who get a few hundred $ a year. Everything is pretty cheap. I know this as I come from a formerly communist country. You spent 5 years saving up for a TV (1960s). Rents were cheap, say $5/month. But you earned $20/month :)

A lot of stuff they use are made in the West but the mfgs sell into China for far less than they sell down the road. For example Intel might sell a CPU in the West for $100 but they sell the same chip to china for $20.

Good economies of scale and proximity. You make something. PCBs are made next door. Metal boxes made 2 doors down. Injection moulding 3 doors down.

Compliance is mostly fake. CE declarations are fake. ROHS is fake.

China has a lot of capital equipment which was set up there by western firms, years ago.

A lot of stuff they are selling is stolen from the stock of a firm which went bust. Chinese mfgs go bust at a fantastic rate. The stock then disappears rapidly and pops up somewhere else. Nobody can keep track of it. The place is dysfunctional, tax evasion is rife...

There are govt subsidies e.g. DJI is heavily supported by chinese govt.

A lot of stuff is surplus stock which somebody just wanted to get rid of.

Western chip makers charge a lot because they can. So an STM arm32 chip might be $5 while the chinese equivalent (one of their "fake" 32f407 etc) is $2.

Add up all these factors and you get a much lower price.

However a $0.90 mp3 player was definitely stolen stock ;)

Bud:
I always laugh when i see someone writing Oh, they only make $20 a month in thay country, Oh, they only make $5 a month in the other country. It means exactly Nothing, because you are not giving figures on cost of living in those countries. How much the consumer's grossery bucket cost for a day. How much it costs to raise a child, to get education. Spoiler: in many those countries University/Colledge education is Free. Medical care is Free. So who is the poor countrg here?

peter-h:
That is what I said. You are paid little but everything (basic) you need to buy is also very cheap.

Then exports from the said country are accordingly cheap.

China also benefits from many "distorting" factors e.g. widespread tax evasion.

Another curious thing is how can they send €1 stuff to Europe by post, with postage included. It would be completely impossible to do this in the opposite direction. Does anyone know how this works? AIUI they use consolidated sea freight and then the packages are injected into the European postal system (which is why it takes a number of weeks). It doesn't really explain it though, unless the post offices here are doing some kind of amazingly special deal for pre-sorted bulk mail.

gf:

--- Quote from: peter-h on August 02, 2023, 08:32:29 am ---Another curious thing is how can they send €1 stuff to Europe by post, with postage included.

--- End quote ---

The Universal Postal Union (UPU) sets the conditions for international postal traffic. In the UPU, China is still considered a developing country (for historical reasons dating back to the 19th century) and receives subsidies. This, of course, distorts international competition.

Berni:
The cheep shipping from China is the result of the Universal Postal Union.

Because back then China was classified as a developing country, this made them get huge discounts for shipping services. This is at the expense of higher cost of shipping between the rich nations, who can afford it. This was meant to help poor countries. But Chinas export centered strategy used this discount as a path to flooding the worlds markets with there cheep exports. At the same time China made sure that the local currency does not raise too high in value, this makes exports look even cheaper to other countries. For example Switzerland didn't do that and had its currency skyrocket, now limiting its growth potential as exports are no longer cheep for others to buy, hence why only the high quality brands can survive there as they are justifying the high price with a high quality product.

Cost of living is indeed very varied from country to country. The countries with poor economies have very low wages, but stuff in stores also costs less. In Europe a number of people seek employment in a neighboring country for this reason. You can drive to your job across the border to get a higher paycheck, but actually live in the poorer country where everything is cheaper.  Tho the price differences are mostly for locally produced things (like food). For purely imported things (like an Intel CPU) they don't really get that much cheaper.

Here in Slovenia we are not exactly a rich country (but still well ahead of the balkans down south) while computer parts are actually a fair bit more expensive than in the USA or Canada.

What the poor countries get in the form of cheep import products is things like refurbished stuff, 2nd hand products etc.. Nothing goes to waste there, if it still works, it will get used.

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