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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: GST who wrote (34101)	7/23/2005 9:31:13 PM
From: RealMuLan	Read Replies (2) \| Respond to of 116555

It is all over on the Chinese site, take your pick if you understand Chinese google.com And actually, 2-3% is not the worst. For example, OEM microwaves produced in China (most of them in ShunDe Guangdong), has ONLY 1% of the net profit! The profit chain for modern production is "V" shape, the so-called Smile Curve. The biggest profit is on the one end which is R&D, on the other is distribution/retail/service. These two ends will count >60% of all profit. The profit from manufacturing part now is only counted for around 5%. Wonder why the big multinational companies export all those manufacturing jobs? And what China has done is voluntarily playing the role at the bottom of the Smile Curve, with big imports and big exports. All China gets is a tiny little cheap labor profit. For example, the Barbi doll, it sells for $10 on the US market, but the export price from China is only $2. And this $2 is NOT final profit, $1 is shipping/administration cost, and $0.65 is for the imported matarials/parts, so only the remaining $0.35 is left for the Chinese company. And that $0.35 includes all the cost on China's side, like workers' salary and all the basic cost to remain the shop open. Another example, cig. lighter produced in WenZhou. The price for 1 lighter leaving from China's port is 2 Euro, but it sold for >20 Euro in Europe. The same thing, that 2 Euro China gets will have to pay 1 for shipping and adminstration.... Generally speaking, at best, the foreign investors in China supply 30% of capital, but get 50% of company's holding (in stocks), take away 70% of profit. China only get 30% of gross profit. And all the shipping, adminstration, energy consumption, workers' salary... you name it, ARE from that 30%! As for OEM business, China only get 8%, just like the two above-mentioned example. So if taking into account of the damage being done to China's environment, China gets NO profit, but lose Money! Some research comparing China as the waste bucket in the kitchen. China has made wonderful dishes for the world, especially the developed world, meanwhile, China saved all the junks produced in the process of making those dishes to themselves. BTW, some high-ranking Chinese officials have sold their soul to the multinational corporations, so whatever they say is based the big corp. interest! Just a couple of days ago, the news had that Softbank, Japan, took out all their investment from Shanda Interactive Entertainment Ltd. They invested $40 million in this Chinese gaming company several years ago, and now taking $640 million profit away! So whoever in the West blaming China for anything, whethe it is RMB exchange rate, or global warming, blah, blah..., is a hypocrite, period! If they really want to blame someone, go blame their own big multinational coorperations and their own gov. which support those companies.