[Shop-talk] Cheap vs. name tools (was: Levels)

[David Scheidt]

On Mon, Sep 15, 2008 at 2:34 PM,  <eric at 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 at gmail.com