Yiwu: Chinese Retail Questions...
Thanks for adding the Chinese iPod example to my explanation of why Equivalent Value methods aren't very useful for valuing currencies. And thanks to Darffot, as well.
I've been to China 4 times since November of 2000 (2 adoptions and 2 dragonboat races) and each time I've noticed interesting things about the way retail works on the Mainland, including:
1. Department stores (and almost all service sector jobs for that matter) seem to be incredibly overstaffed by American standards. I went into some large stores that seemed to have almost as many salespeople (usually young females) as customers. It seems like such a store would have to be very high margin to support such a large staff. Are there any barriers to a company like Walmart coming in and selling goods at lower prices with minimal sales support?
2. Many indoor malls and outdoor markets had several private merchants selling essentially the same goods right next to each other, in competition but also working together. If one merchant didn't have a shirt I liked in my size, she would take one off her rack and run over to the shop next door to trade, then come back to finish haggling. While I suspect that almost all of the goods sold in these types of stores were made in China, does any significant amount of imported goods make it to these markets?
I suspect that retail prices change very slowly to reflect changing currency values. Eventually the RMB will float, or at least revalue versus the dollar or a basket of currencies, and the Chinese consumer will have much more purchasing power. What structural features of Chinese retail do you think will help or hinder the ability of foreign goods to do well in the Chinese retail market?
I ask this partially as an attempt to understand what it will take to close the US trade gap. If the US can successfully increase exports to China and other nations, then the gap can be closed without reducing imports too dramatically. If official and unofficial barriers prevent US goods from selling well, then the US trade gap will eventually be reduced more by reducing imports and the standard of living in the US.
I think the effect of European laws protecting small, local retailers and retail employees tends to decrease the amount of goods consumed, thus encouraging more saving and keeping money within a community. Meanwhile, in the US, Walmart has free reign to suck money out of a community by selling more goods and paying lower wages. |
