Samizdata

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.