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The Chinese goods market

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Posted by on Monday, May 17, 2010, 17:19
This news item was posted in Business category and has 3 Comments so far .

KARACHI: More than half the appliances in your home are made in China—from the light fixtures to the kitchen sink to the water pumps.

A Chinese air conditioner, by their own claims is expected to last about 5 years while it is not uncommon to find Japanese appliances or German machinery still in use 15-20 years after manufacture.

Chinese Goods Market

Chinese Goods Market

Cost metrics

Despite the shorter life spans and frequent maintenance, there is a strong affection for Chinese goods stemming primarily due to lower upfront costs and loss aversion. Behavioural economists have long known that human beings are risk averse by nature and would rather win Rs 100,000 outright than gamble a coin toss for a 50% chance to win Rs 300,000 even though the latter is statistically more profitable of the two. The failure of a Chinese appliance or machine would hit the wallet half as much as the failure of a Japanese counterpart and buyer remorse would be worse. But the surge of Chinese goods goes beyond consumer psyche.

Manufacturing

Economies of scale are highly sought after in manufacturing. Setting up a huge factory to manufacture large quantities typically results in lower costs per unit and provides a competitive edge. However, China has emerged with an altogether different model which encourages disposable factories. These disposable factories can cost up to a fifth of the price of an American factory. They do not carry high warehousing costs. Instead, they follow a just-in-time manufacturing model and operate under their own indigenous brand. An air-conditioner manufacturer would rather purchase from nearby factories than build its own compressors, coils, and fans. In fact, it chooses to focus on just assembly and pricing while allowing each supplier to specialise in their individual components. The same manufacturer does not have to worry about establishing a marketable brand or striving for quality assurance either—quite the contrary. The focus is almost exclusively on lower costs and higher cuts for all middle-men. Distributors and retailers would rather push Chinese products and earn more while consumers would rather pay lower prices.

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3 Responses to “The Chinese goods market”

  1. mksachan
    2010.06.03 10:49

    Dear sir
    I have requirement of some cryocans /semen tanks ,china made the address of manufacturer are given below-Qingdao Ruifeng Gas Co., Ltd. [China (Mainland)] City: Qingdao State: Shandong
    Country/Region : China (Mainland)
    Business Type:Manufacturer, Trading Company, Association
    if you are interested to start business with us please provide me full term and condition of goods supply FOR AT LUCKNOU UTTAR PRADESH
    thanking you
    with regards
    M.K.SACHAN
    Mob-09450313528

  2. mksachan
    2010.06.03 10:51

    1.

    Dear sir
    I have requirement of some cryocans /semen tanks ,china made the address of manufacturer are given below-Qingdao Ruifeng Gas Co., Ltd. [China (Mainland)] City: Qingdao State: Shandong
    Country/Region : China (Mainland)
    Business Type:Manufacturer, Trading Company, Association
    if you are interested to start business with us please provide me full term and condition of goods supply FOR AT LUCKNOU UTTAR PRADESH
    thanking you
    with regards
    M.K.SACHAN
    Mob-09450313528

    Leave a Reply

  3. appliances
    2014.06.06 09:58

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