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Originally Posted by Tom Bombadil
It will be a great news for consumers if everything assembled in China is counted as domestic product. I don't know if they ship these things outside then inside for the Chinese market, but what I do know that we pay tariff for everything with a foreign brand from Nike shoes, IBM/lenovo laptops (yes, you read it correctly, LENOVO laptops) to ipad and iphones. As a result, the domestic price is actually higher than those on the US or HK market, so it is actually lucrative business for smugglers. I have heard explanations such as that we need to pay extra since the patents (the design or high tech processors etc.) are held by foreign nations. But I don't know how credible such explanation is.
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That's what I have heard too. I don't see how such the high prices are part of "patent royalties", I think the higher prices are some sort of invisible tax buried under a six-foot tall plaque of legal jargon to stifle foreign competition and simulate consumption of local MIC goods - they seem to be rather skeptical about the outflow of cash from their country through exchange rates.
OFC, Sumeragi could be right though :
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Originally Posted by Sumeragi
I think there's another element to the higher prices. Aside from the state-side parts (tariffs, quotas, etc), there is the basic higher demand. Those who have the money would rather buy foreign rather than domestic, and that adds to the price. I noticed this difference in how Nike shoes in Korea were a lot cheaper than in Japan, US, Canada, mainly because there isn't as high a demand for Nike shoes.
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What matters is that assembly is the smallest component of the entire price. More than half of the price comes from the cost of buying components from Japan/Korea/Taiwan, and after taking out the assembly and shipping costs, there's still plenty of other things to consider. Take in all that, and the actual contribution from PRC's labor force is minimal at best.
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It depends on where the component-manufacturer is. A recent trend I see in Chinese companies is that they are setting up their own manufacture facilities for the smallest components to avoid shipping prices; I know of a supplier dealing in solar panels that his factory took the polycrystal cells from another manufacturer from China, assembled them elsewhere in there then send it for QC in Shanghai, before sending the thing for export.
The whole thing is Made in China, other than the brand which is printed in the country of the retailer. And now he is wringing his hands at the trade row between US and China regarding solar panels because most of his clients are there; I told him not to bother and go find clients elsewhere.