One of my partners is an Indonesian.
He doesn’t know Chinese very well, so he asked me to go with him to the China Canton Fair this year. He wanted to find some business. The final business was to negotiate with a factory in Zhejiang, and I served as an interpreter.
He wanted to purchase a batch of lighters, the most common type, with a plastic shell and disposable after use.
The price quoted by the Chinese was very reasonable. According to their quotation, each lighter was less than 0.2 US dollars. It can be sold to retailers in Indonesia at 0.5 US dollars each and still be profitable.
But my friend was not satisfied. He wanted to reduce the price to 8 cents each. The Chinese said that price was impossible, but of course they were still working hard to get the order.
My friend said: “My lighter is used for free gifts. It will be placed in birthday cakes as a tool for lighting candles. I need to keep the cost as low as possible.”
The Chinese representative contacted the factory engineer by phone. In the end, they gave a solution:
Replace a smaller shell. Use glue instead of a seal. The ignition of the lighter was replaced with a simpler flint, and the metal windshield was replaced with plastic. The flammable gas was replaced with a cheaper formula and the gas regulator was removed.
The cost of the lighter was reduced to 8 cents each, but the Chinese told them that this lighter might only work 5 times and could not be stored for a long time.
In short, a reliable lighter became an industrial waste that could only be used a few times.
But the Indonesians were satisfied: working 5 times was enough because it was only used to light candles.
However, things were not that simple. A few months later, I found that the Indonesians put part of the inventory on TEMU and Amazon and sold it at $0.2.
I believe that people who bought these lighters will complain on various social platforms: “Made in China is garbage”, but they will not tell people that they only spent 20 cents to buy them.
My answer may surprise you…
About 20 years ago, A relative invited me to help him at an exhibition in Hanover, Germany; He’s Chinese and doesn’t speak English, all expenses paid plus salary, so yeah…
The show covered manufacturers of the same industry from all over the world. China had its section. other booths hired Chinese students studying there, they spoke German (and Chinese)… I was the only one that spoke English.
By the third day, all the major US buyers just sat in our booth. They weren’t interested in our prices. They showed us their purchasing price (and all other “rivalries” quotations). We match and the business is ours.
Their pricing is way below our manufacturing cost. But my uncle was determined, he agreed to all of it.
I have since learned that buyers, not manufacturers, set the price. This is a common practice in all industries.
Manufacturers, in turn, profit by maximizing their production capacity with these major orders (either in 0 or negative gain). Then make profits through other sales in the same production line.
Furthermore, the “low-end” products meet all “federal” and “store/buyer” requirements, from safety to specifications and manufacturing guidelines to the local return policy… The manufactured goods must meet them all, or they won’t get paid (usually in a bank’s LC).
To no one’s surprise; if 10% defect rate is expected, 10% additional product is included in each delivery… All scenarios anticipated and of course, covered.
Whatever you considered low-end; it is exactly how your store wanted them, the Chinese did not choose these specifications.
Believe it or not… many luxury brands are produced (completely or partially) in China… just not the recognition. Brands use loopholes; For example, an Italian suit can be handmade in Asia and then sent back to Italy to sew on the label, and now it’s “Made in Italy” or “Final Assembly in Italy” or “Hand sewed in Italy”.
Point Being; please give a little more credit to everyone… We Chinese can copy everything, some of them ought to be good. Also, the white people are a lot smarter than they let on; they know what they bought to sell.
You must be living in a cave.
Twenty years ago, China only made low quality, cheap goods. They still make them because buyers want them. Walmart couldnt survive without them.
Nowadays, China makes many high end products, designed by Chinese engineers.
40,000 kilometers of high speed rail in China. 347 kmh an hour. unmatched safety record. you couldn’t keep running them if they unsafe.
I was a professional photographer in Canada. Chinese photo gear was garbage. Now they have taken big strides. My tripod is made by Chinese company named Sirui. Carbon fiber, rugged and light weight. I’ve used mainly German tripods, even Leica, but the Sirui is the best. do a search online. check the reviews. Hand crafted by skilled machinists.
And Chinese companies have taken over failed western companies. Improved quality and become top sellers. Volvo was owned by Ford and lost money. Geely bought it up and gave an investment of 5billion to.make a new platform.
Two years later Volvo had Car of the Year. They boldly announced that no one will die in a Volvo by 2026. They are still the safest cars on the planet. MG was a British car company know for sport cars called roadsters. Now owned by Chinese car company.
Just launched an EV roadster. The British car magazines are raving about it. And all said it stll looks British!
Just a few examples….
