On Mon, Sep 15, 2008 at 2:34 PM, <eric@megageek.com> wrote:
> 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.
>
In fact, China has a labor *shortage*, and wages are rising rapidly.
High-labor, low-skill jobs are leaving China, and going elsewhere,
where it's cheaper. (Mostly to Vietnam, at the moment, some places in
Africa too)
> 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.
And, even so, it's only about 10 or 15% more expensive to make things
in the US.
--
David Scheidt
dmscheidt@gmail.com
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