This is a very interesting article about China’s growth and how they are going to be the investor rather then the investee. Some good points are made here about natural resouces and oil that should make you think about buying a hybrd car soon. Check it out here
I’m no expert by any means in the laws and rules regarding exporting and importing. But I found this article on the National Textile Association’s website. So I will take their word on this. Here is a bit from the article:
“Take the yarn spinner I heard from at the Washington meeting. He cannot sell his product in China because even if he can meet the price of locally-produced Chinese yarn (which benefits from the low wages and environmental standards in China and the government subsidies such as free electricity) he is faced with paying the 17% Chinese valued-added tax (VAT) on top of the 10% import duty. He has already paid the full cost of U.S. federal, state, and local taxes, and will have to pay Chinese tax in addition.”
On the other hand, a Chinese company can ship yarn to the U.S. and pay just the import duty (also about 10%). The U.S. has no VAT or other taxes imposed on imports comparable to the income tax, property tax, and other taxes paid by domestic manufacturers. Furthermore, that Chinese company can get a Chinese government refund of the VAT when the company exports to the U.S.”
Source:
POST-GAZETTE - Res Publica Heads, I Win; Tails, You Lose by David Trumbull April 20, 2007
You may recall last winter the news stories of fur lined clothing coming from China was found to be dog hair instead of rabbit, or whatever it was supposed to be. Here is another story from The National Textile Association where it was found that China was exporting 800,000 items that were made of cashmere, however when a Japenese lab tested them there was very little real cashmere in them. All 800,000 items were recalled. Also some products headed for the US and Japan that were made of wool were made of Yak hair.
So there are many reasons products are cheap! Sometimes they are not even real.
We are not the only people in the world hungry for cheap Chinese goods. The Chinese city of Shanghai is growing leaps and bounds fed by the West’s taste for their cheap goods. Look at the following quote from a recent BBC article
“To ensure Shanghai dominates foreign trade, it is building the world’s largest container port on an island 30km offshore, linked by a six-lane bridge.
“I have nothing against them at all, but just remember every time we buy goods from overseas when there was a domestic product we could have bought, we help pave that giant 6 line bridge!
Read the article here, this probably is not what our US auto firms need right now. With the news Toyota is taking over the top stop from the US giant another player is about to enter our market.
Competition can be very good. I think our US auto makers need to fall out of love with SUV’s and trucks and get craking on some smaller cool sedans. What was Ford thinking when the axed the Taurus.
