Postby TomAiello » Mon Mar 16, 2020 9:26 am
On the economics of Chinese trade, a large part of what's going on is the relative value of the Yuan, which is artificially depressed by an active Chinese monetary authority. Basically their government is keeping their money value down to create more industry. In the long run the biggest loser there is not the American economy, or the American people, but the average person in China, who works for pennies for their entire life because they are getting shafted by their own government. Historically, artificial devaluation strategies have only worked on one or two occasions. As soon as the government lets the currency float, the trade balances change. The real end game to the Chinese trade issue doesn't happen when Americans "wise up" and stop buying Chinese made goods. it happens when Chinese people "wise up" and realize that their government is holding them in appalling poverty for it's own benefit, and forces change. If the Yuan were to float, the average Chinese person would become 10 times better off in a year or less--but the political reality is the current government of China won't allow that because it doesn't serve their political interests. Blame can't be apportioned precisely, but the vast majority of the blame for this situation isn't on the US government or the people here, or even the people in China--it's on their government. And the vast majority of the negatives are being imposed on the average person in China--we're only seeing the tip of their iceberg.
FWIW, I have been involved in import/export and I know of several products you can buy on Amazon in the $25 range (for one unit) that cost (landed in the USA, at the warehouse) the importer less than $2 (in containers of 15000-25000 units). After cost of sale (amazon fees, advertising, shipping, etc) the importer is making roughly $10 per unit. That means that about $2 goes to the Chinese manufacturer, about $13 goes to UPS and Amazon, and about $10 goes to the company that does the design, marketing and quality control (and puts up the at-risk capital, as well as taking the loss for defective units, returns, etc). It's easy to get shock value out of that situation by saying "they bought those things for 2 bucks and are selling them for 25!" but I honestly think that the risks and rewards are fairly reasonably apportioned. I hope Spyderco is getting similar price/sale ratios on their Chinese made knives, because I understand the amount of back end work they have to do, and I appreciate the hard work they are putting in.