When I wish to buy cheap low end computer accessories (cables, card readers, laptop batteries, etc), I find that it is much cheaper to buy them on eBay from foreign sellers, rather than from anyone in the UK. I have been doing this for five years or more, and it is interesting to see where the items then come from. Five years ago, they were almost always from Hong Kong, with return addresses in places like Yuen Long. (“The unfashionable end of the western spiral arm of the New Territories”). The markets where the sellers get them from are actually over the border in Shenzhen in China proper, so I suspect that these sellers make regular trips to the markets over the border, bring stuff back, and then post it to buyers in the West.
I still get items from Hong Kong, but in recent times it has become more common for then to come from Shenzhen. I am not sure if this is due to another set of eBay sellers having come into being on the other side of the border, or if the same ones are simply posting from a post office on the other side of the border because this is cheaper. (How international postal services relate to one another, and whether and how much money is paid from the sender to the recipient national post office is a complete mystery to me, alas. I suspect it is as baroque as the equivalent system of international telephone call settlements (which I did understand) was before it collapsed under its own insanity. There are undoubtedly some hidden and probably unintentional subsidies somewhere here). My hunch is, “a little of both”. Some Hong Kong sellers posting in Shenzhen – some Shenzhen sellers.
In recent times, the items have occasionally been posted from Dongguan, part of essentially the same economic and manufacturing cluster as Shenzhen (although not a Special Economic Zone, but politically speaking just an ordinary prefecture level city in Guangdong province). However, far enough away from Hong Kong that Hong Kong people are not going to go there to buy and send stuff. Therefore, these sellers are definitely mainland Chinese.
And today, I received an item from Zhangpu in Fujian province, a good way north up the coast. This is one of the more prosperous regions of coastal China (south of the Special Economic Zone in Xiamen), but Hokkien rather than Cantonese speaking and far from recent European influence and probably a centre more for trade and investment from also Hokkien speaking Taiwan. It is interesting to see this sort of activity moving up the coast, but there is no sign of it moving inland. Of course, it is always going to be close to the factories.
However, write a little English, and the fact that you can sell stuff to people throughout at least the English speaking world has clearly been learned. As an observation, I have found such Chinese sellers to be reliable and honest in their dealings with me. They send you exactly what they say, the products all work properly, and if there is any kind of problem (such as a missing item due to postal problems) they are eager to resolve it. An excellent eBay reputation is very important to such people. This works so well that I don’t actually bother looking at eBay feedback from Chinese sellers before buying: I simply assume that the system has weeded unreliable and dishonest sellers out automatically.
On the other hand, this particular purchase was a card reader, for which I paid a total of £1.67. including postage. eBay fees might amount to about 20p. The postage label says that postage cost ¥9.60, which is at present equal to about 90p. This leaves about 57p to pay for the card reader. Allowing the seller a modest 17p profit, we are left with a card reader coming out of the factory no more than 40p (and possibly a good deal less, depending on how many middle men there are), which is a miniscule sum of money.
My preferred conclusion from this is that economies of scale are wonderful, capitalism is grand, and modern technology is awesome, in that technological products all become so cheap so fast that almost nobody has to be excluded from owning them. And this is true, of course, although I worry about something else. When capital is too cheap due to excessively easy credit, all kinds of capital intensive businesses appear to be profitable, when in reality they are receiving a subsidy from the banking system. (Another, non-Chinese example: a large portion of Europe-Asia air travel has in recent years been taken over by airlines based in the Middle East Gulf states. The cost of capital of these airlines is artificially low, as they are implicitly backed by the oil wealth of Abu Dhabi. Whether they would be profitable with out this, it’s hard to tell).
China’s banking system is incredibly opaque. The bits that we can see aren’t especially pleasant to look at. And of course, opaque = bad, pretty much by definition. When everything unwinds, the consequences will be unpleasant, featuring scenarios that will appear oddly familiar to us. Government bailouts of banks, savers being robbed of the value of their savings, and inflation, perhaps. And perhaps this is already happening. £1.67 is actually a bit on the high side, compared to prices I was paying for similar items a few months back.
Michael, I have a feeling you will be living there one day on a full-time basis!
Apparently, it’s only a very little English… 😉
Have you tried dealextreme.com? Everything you could imagine, cheap, and free shipping worldwide too.
I have an interest in antique swords. China is the main source for fraudulent counterfeits, not advertised as reproductions either.
What interests me is that you can buy an item with free shipping for cheaper than what it would cost to ship it internally in the US. Something is screwy there (though I reserve judgment on what it actually is).
The only problem I’ve found is the bloody Chinese new year. Everything shuts down for a week or three and then there’s backlogs and suchlike. I’m still waiting for items I ordered in January. Still, them’s the breaks.
I’ve had the Chinese New Year experience, too, but I can’t really begrudge them that. Everyone deserves a holiday once in a while.
I think I can answer your question, though, although it involves a certain amount of speculation.
Domestic postage is cheaper in China than in the US, because labor is cheaper in China than the US and labor is a large portion of the cost of running a postal service. If you send an international letter, you pay a premium over a domestic letter. The premium in China is similar in percentage terms to what it is in the US, but it dollar terms the premium paid in China is much smaller, so that the total price paid for postage to the US from China may be smaller than the price of posting a domestic item in the US. The US and Chinese post offices have an agreement that there will be no payment from one to the other for completion of postal services, as long as volumes of mail in both directions are roughly the same. There may be a clause providing for a payment if volumes are not roughly the same, but the price is likely to be set by archaic postal treaties and is likely to be much too low. The actual cost of the plane or ship from one country to another is these days likely to be a small fraction of the total price, as shipping is today very cheap. In effect, the premium over domestic postage paid by people posting letters to China from the US is used to pay for the US delivery of letters received from China. Similarly, the premium over domestic postage paid by people posting letters to the US from China is used to pay for the Chinese delivery of letters received from US. However, this is much smaller, as labour is cheaper in China.
In effect, a subsidy is being paid from people who post letters from the US to people who post letters to the US. The factory price of some of these items that we buy can be so small that the total cost to you, including postage from China, can be less than domestic postage.
As I said, this is partly speculation on my part, as I am not familiar with the workings of post offices in great detail. However, this is how things used to work with international telephone calls in the days of national telephone monopolies, although that system collapsed under the pressures of competition and rapidly falling costs due to improved technology.
@Bruce Hoult:
I’ve actually found that DealExtreme is one of the more expensive of the options. EBay normally has better prices, and there’s also a few other wholesalers that do as well, though DealExtreme has the best variety of stock I think.
The Chinese banking and monetary system is indeed hidden in mists.
I have heard everything from it is about to be directly linked to gold, to it is a vast credit bubble just about to collapse.
I suppose the only good thing one can say about the Chinese system is that one KNOWS the American (and the British) systems are no good – the facts are in the public domain (for people who bother to look) and this system is DOOMED (TM).
With the Chinese banking and monetary system – as the basic facts are hidden away, I simply do not know.
It could be a vast credit money bubble – or it might not be.
For China to not have a vast credit bubble, Chinese labour productivity would have to be a lot higher than I think it is.
At some point we will find out, though.
I think the basic assumption that “If a government has a lack of transparency, they have something to hide” is a fair one to make, though.
staghounds: Is it hard to tell that the swords are fake antique swords?
At least with electronics, it either works or it doesn’t, and if it doesn’t, you know straight away. So the eBay feedback system should work well.
I have seen a forum post from someone who found his 16GB SD card from eBay didn’t work when he tried to write more than 4GB of data to it. I don’t know how prevalent this is but, again, it is probably easier to get away with such a fake.
From China I buy white label, unbranded computer accessories, basically. The key issue is “Do they work?”, and the answer is generally yes.
I also had a problem with a memory card. It was the right size, but clearly a factory second and it didn’t work properly. I complained to eBay, and my money was refunded shortly afterwards. The seller then vanished off ebay. So, mildly annoying but the feedback system worked perfectly.
It was a branded item, oddly enough, SanDisk I think. I suspect the advice of “Don’t buy familiarly branded items” remains good, as known brands will not sell through such channels and if the item has such a brand there will likely be something dodgy. Sellers of white label goods will be happy to sell to anyone, and they do.
>a large portion of Europe-Asia air travel has in recent years been taken over by airlines based in the Middle East Gulf states. The cost of capital of these airlines is artificially low, as they are implicitly backed by the oil wealth of Abu Dhabi. Whether they would be profitable with out this, it’s hard to tell
You know far more about airline economics than I do. Nevertheless, it occurs to me that large numbers of expats from both Europe and the Subcontinent work in the Gulf, providing these airlines with a large more or less captive market on top of which I would guess through travel is quite a minor sideline (price-insensitive business travellers fly direct). Also, my one experience of a 777 from Kuwait to Kerala was that it was easily the most comfortable economy class I have ever flown in; this might also have a lot to do with the Gulf airlines’ success.
Does anyone really think there isnt a huge economic bubble in China, which will pop sooner or later? Really?
I watched a fascinating documentary called Mardi Gras Made In China, which shows the working conditions of the largest bead factory in China, which supplies many of the plastic necklaces used in New Orleans every year. It is an eye-opener, and gives some insight into part of why Chinese labor costs are so low.
Especially poignant at the end is when the film maker shows some of the workers what people actually do with the beads they have been toiling over.
Michael, I expect the same thing WRT the postage. Ironically, the USPS just announced its having problem and a senator was heard to say hey were having trouble finding customers (Can’t find a link to get the quotes right, sorry). Seems like maybe they have plenty of customers, just non-paying ones from China. I’m just surprised it hasn’t been brought up as a potential source of problems so far.
My experience with with Brunei Airlines gave me the impression that it is pretty much a vanity operation and not especially designed to turn a profit. I remember Brunei airport as a huge, empty place with no air conditioning and no distractions(a hellish place to be for 8 hours).
I’d say that it’s possible that China has a negative bubble if anything. Huge resources (mostly population) under-trained and under-utilised. Living standards and productivity have a lot of room for improvement.
Well, the plug on my Lenovo charging cable looks like it’s going the way all its predecessors did, and so this time I looked it up on eBay. The going price is about $12. The shipping to Israel is about $40 (the combined price of ~$50 seems to be the going price at my regular computer store here). The shipping to the UK is free.
Oh, and of course, few even ship to Israel in the first place.
I read today that the post office is losing 15 billion per
year and needs to lay off hundreds of thousands of
people. Could it be that all these foreign shipments
are bogging the system down without putting any
money into supporting the post office’s labor costs
and such? I have bought stuff for 99 cents and free
shipping – but we all know that shipping is *NOT* free
in reality. The post office losing that much money proves
that. Any thoughts on that?