I?m not an economist, nor do I play one on TV. But I am working on my MBA
from this God awful desert 7000 miles from my home. But here is how they
make $2 flashlights.
First, and maybe most importantly, China keeps their ?dollar? (the Yewan
(SP?)) pegged to the US dollar. This means that your $2 dollars are a lot
more in China, even as the dollar drops in value. (Note, the US has been
trying to get China to stop doing this and the recent low valve of the US
dollar may force them to.)
Another factor is the amount of people in China. When you have a work
force of almost a billion people, it?s easy to find someone to do the job
for less. In fact, labor is almost an insignificant cost in many of the
operations.
Then there is the volume factor. The amount of those flashlights they
produce off that line is mind boggling. I?m sure on this list we most
likely have at least 3 of those lights per list member. When you have a
line that can keep pushing out the same product, costs can drop. There
are no retooling expenses, no down times, no retraining losses, etc.
With that volume, the amount they need to profit on each one goes down as
well. The more they can make, the cheaper the price goes.
Then you look at benefits. If you think the average Chinese factory
worker gets health care, or even knows what retirement is, you are most
likely wrong. These people work hard for little pay and no benefits. In
fact, I think someone here once posted a statistics about how much of an
American car purchase was just health care for the workers.
Then there is the lawyer factor. Insurance, regulation, and litigation
has made doing business in the US all but impossible. It?s very expensive
to try and do simple things in the US, yet in China, none of these hurdles
exist.
Add all these factors up and it?s easy to see where that $2 flashlight
comes from. This is most likely more than you ever wanted to know about a
flashlight, so I?ll just go back to war now.
Oh, one note for you tools hounds, on this base, we have scrap yards of
metal, wood, etc and vehicle junk yards. All of which are free for the
taking! It?s like being a little kid and having the coolest Lego set in
the world. (Think about taking humvee drive trains and putting in on a
homemade motorcycle!) So far, I?ve been limited without my tools, but I?m
working on getting a set from a local national!
Moose
Everything I know about knots, I learned from Alexander the Great.
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