- 1. THE CHINA PRICE BY GAURAV PATEL ( KH08JUNMBA65 )
2. PAST->PRESENT->FUTURE
- The Nineteenth century belonged to British Because of their
ability to exploit their colonies throughout the world.
- The twentieth century belonged to the Americans because of
their ability to innovate and produce things the world had never
seen.
- The Twenty first century, it is said, it will belong to China
with its ability to produce things at a price, which no one around
the world can seem to match.
3. DEFINITION
- The China Price is a term business-people in the US began using
around 2003 to describe ultra-low prices of goods made in
china.
- The prices are as low as fifth of the cost of products
manufactured in developed countries.
- Chinas low price is one great force of our time, throwing
millions of people out of work around world, helping millions of
families in rural china out of poverty, and encouraging Americans
and Europeans to buy lot of stuffs they probably didnt need.
4.
5. Key drivers
- Low-wage, high-quality work by a highly disciplined, educated,
and non-union work force.
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- The average hourly earnings is well below a dollar.
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- There exists the largest reserve army of the unemployed ever
created in human history.
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- Despite two decades of double-digit GDP growth,Chinas reserve
army continues to grow, not shrink.
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- Privatization of industry andrapid rise inurbanizationof the
population.
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- Migration population exceed one hundred million and comprises
the largest part of the core of Chinas reserve army of the
unemployed.
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- Non-union Labour due to which workers are forced to work 12-18
hourdays.
- What is stunning about China is that for the first time we have
a huge, poor country that can compete both with very low wages and
in high tech. Combine the two, and America has a problem.
- Professor Richard Friedman, Harvard University
6. Key drivers
- Lax Health, Safety, and Environmental Regulations.
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- The Chinese government imposes few health and safety or
environmental regulations on its corporations or remaining
state-run enterprises. What rules do exist are only weakly
enforced, evaded, or simply ignored.
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- The lack of a basic regulatory and legal system is viewed as a
great virtue by foreign corporations that want to evade much
harsher regulatory and legal regimes in their own countries.
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- As workers do not receive health care from the state and are
unable to extract adequate compensation from their employers, the
Chinese (and multinational) companies that grind up and spit out
these workers enjoy a cost advantage over countries where workers
are better protected.
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- Nationally, 140,000 people died in work-related accidents last
yearup from about 109,000 in 2000, according to the State
Administration of Work Safety. Hundreds of thousands more were
injured.
7. Key drivers 8.
- 4.Network Industrial Clustering in Chinas Ultimate Pin
Factorie
- The famous toy cluster in Guangdong Province
- National and regional economies tend to develop, not in the
isolated industries, but in clusters of industries related by
buyer-supplier links, common technologies, common channels or
common customers. The economies of the Pearl River Delta region are
no exceptions. The region has developed a broad range of clusters
in garments and textiles, footwear, plastic products, electrical
goods, electronics, printing, transportation, logistics, and
financial services. The Pearl River Delta regions electronics and
electrical cluster is particularly strong and accounts for the vast
majority of Chinese production in a wide range of industries.
Key drivers 9. Key drivers
- 5. Rampant Piracy and Counterfeiting
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- The breathtaking scope of Chinas government-sanctioned
counterfeiting and piracy. However, two brief points related to the
China Price are worth noting here.
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- Counterfeit or pirated factors of production are able to cut
significantly their costs relative to countries where intellectual
property rights are respected.
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- The piracy and counterfeiting that exists in China is largely
the result of a tacit government policy to allow such practices to
flourish.
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- The reason for Chinas tacit sanctioning of widespread
counterfeiting and piracy is that the Chinese government is well
aware of two things. Counterfeit and pirated goods sold
domestically help keep inflation low, and selling these goods
internationally creates jobs and export revenues.
10. Key drivers
- 6. Beggaring Thy Neighbours with a Chronically Undervalued
Currency.
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- Chinas beggar thy neighbor currency policy is an important
engine of its
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- China has adopted a fixed exchange rate system in which it pegs
the value of
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- its currency, theYuan , to the value of the U.S. dollar.
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- Chinas fixed-peg system means thatno matter how big a trade
deficit the
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- United States runs with China, the dollar cannot fall relative
to the Yuan .
11. Key drivers
- 7.Massive Subsidies and the Great Protectionist Walls of
China.
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- China has constructed a Great Wall of Protectionism around both
its agricultural and industrial sectors.
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- Energy and water are heavily subsidized.
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- state-owned enterprises, which still control key sectors of the
economy such as oil and steel, benefit from free land.
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- Chinas state-run banks provide heavily subsidized capital and
credit to Chinese enterprises without any expectation of
repayment.
- Under state control, many Chinese state-owned manufacturers are
operating with the benefit of state-sponsored subsidies, including:
rent, utilities, raw materials, transportation, and
telecommunications services. That is not how we define a level
playing field.
- U.S. Department of Commerce Secretary Donald Evans
12. CONCLUSION
- The ability of Chinese entrepreneurs to offer the China Price
across an incredibly diverse array of industries is Chinas premier
weapon of mass productionone that is at the root of Chinas conquest
of one export market after another.
13.