Being a product manager for an import/export company that does business with several Asian manufacturers, you might expect that I have a very strong opinion about the availability of cheap manufactured goods from China. I do. They suck. Not only do they suck, but they are the single greatest threat to the United States of America, both in terms of its security and its hegemony in the rest of the world. Now, if we don't really care where we stand in the scheme of things, if we have no problem with going the way of Britain, Spain, and Rome and becoming a second rate world power, then we can simply ignore this blog. But if we've grown accustomed to being a leader in the world, then we simply can't ignore the danger such cheap products create.
So, why do we buy cheap products from China? Well, really, its a matter of supply and demand - more importantly, the Demand part. Let's start with WalMart.
While WalMart was by no means the first company to import products from China, they are certainly the best at it. Supplying the world's largest chain of stores requires extra ordinary effort on the behalf of WalMart. Most American companies can't keep up with the demand of the voracious Walmart shoppers - certainly not without wanting to realize a tidy profit as a result. In China, where profits can be measured in cents, not dollars, a product sold that realizes a few cents profit can be a huge boon to its manufacturers. So in China Walmart has a steady supply of products to fill its stores. It buys these products at incredibly cheap prices and passes on those savings to its shoppers. We buy things from Walmart because they are cheap. As a result, Walmart claims more and more of our business and gets larger and larger and needs more and more product and more and more of our money goes overseas to China. Demand fuels supply everytime.
This, of course, is not lost on those chains that are not called Walmart, nor on the manufacturers that supply those stores. In order to remain competitive with Walmart pricing, these manufacturers also have to start importing products from China. It doesn't matter that these products might be inferior to the products they already have. What matters is the price. As long as they are cheap, everyone can remain competitive. The second Walmart lowers their price to something less than we can offer, we lose that products sales to Walmart. Walmart keeps getting richer, and everyone else keeps getting poorer.
Soon you end up with a situation where 80% of all toys are produced in China, where 75% of all our food is produced in China, and where well over half of all our consumer goods are produced in China. Our manufacturers are laying off employees, suffering through hard times, and feeing the problem just to stay in business. Our money increasingly goes overseas. Our jobs increasingly go overseas.
In short, the purchasing of so many cheap products has turned the entire nation into a bunch of cheap whores - selling out to the lowest bidder every time.
So, one part of me is saddened that all this scrutiny is now being foist upon the Chinese market. I need those sales to keep my job and if there is too much of a backlash, business will surely suffer. Walmart will coast through such a downturn, but the rest of the companies who were forced to turn to China to save their necks, will be crushed under the weight of consumer indifference. On the other hand, any blow to the Chinese economy is good for the U.S.A. If you look at how quickly China has grown in the last ten years, it is primarily because we have been feeding it. China now has the world's fastest growing economy. Tie that to a nation of over 1 Billion consumers and look out. Demand for oil has caused the price to skyrocket. Imagine what demand for other products is going to do to the prices of other things. Five years ago, my very prescient friend told me that the one thing that scared him the most is the potential of China going capitalistic and democratic. If that happens, you can kiss our number one status in the world goodbye.
We made this happen. We demanded cheaper and cheaper products. We took the short term gain over the long term security. Its us that is to blame - not Mattel, not Walmart, and not the Bush/Clinton/Bush/Reagan governments. We drive the economy. If we want to get quality products back on the shelves and correct the imbalance in our economies, then we have to start putting our money where our mouths are - here in America.
There. Got that off my chest. Its now out of my mind. Some of the clutter is gone.
3 comments:
There is a flip side, of course. In a global economy, they sell us cheap toys, we sell them micro chips and information. This of course presupposes a level playing field.
Alas, economics is one of those "magic" social sciences. Crap just happens because people are invested in their own self interest.
Cheers.
Will, I don't necessarily disagree with your premise. But the question is whether American consumers are willing to pony up higher prices for many of these products. And that depends on who you ask.
I agree we should "buy American" - especially when the product is built/manufactured by American labor. However, if we were to use the Auto industry - GM/Chrysler/Ford build a lot of their vehicles in Canada and Mexico, while Toyota/BMW/Honda have large plants in the U.S. for the Camry, Corolla, Accord, the BMW crossover SUV, and others. So what does "buy American" really mean?
Hmm, lest we start up the jingoistic alarms, let me clarify some statements in this post.
Randall - that's sort of my point. We sell them microchips and information. And eventually they reach a point where they don't need to sell us cheap toys, but can compete with us directly to sell microchips and information to all of our customers. Suddenly, we're out of jobs. Its happened before with the auto industry and it will happen again.
Andy - Obviously, buying American isn't as simple as just going to Ford vs. Honda. It doesn't work that way. Clearly in the case of something where the product is superior, you should buy the product wherever you can find it and from wherever its from. I wouldn't dare suggest that American Swiss Cheese is better than Ementaler. But I wouldn't buy Chinese Swiss Cheese just because it was 2 cents cheaper than American Swiss Cheese either. Instead of dollars and cents, value should be judged by bang for buck. And most chinese stuff is crap.
(At my last sales meeting one of the reps made a very good observation - the Chinese are good at making something LOOK like the item it reports to be. I think that pretty much sums up Chinese import products).
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