The meaning of the “Made in China” label, that appears on most of the products all over the world, is probably obvious for everyone. It is known by almost every person on the Earth, starting from children, ending at elderly people. No wonder, because according to different market research, most goods in the world are produced in China. That is why, in this article, we decided to focus on some general connotations connected with Chinese products and verify information about them.
What do the people usually associate with the “Made in China” sign?
Most people associate products with such a mark with:
- Low quality and non-durable products.
- Cheap products.
Unfortunately, the truth is that the above associations are the common ones, according to market research and based on some opinions expressed by people in the street or by our friends. Generally, the Chinese products don’t have good opinions.
What is the truth about products with the “Made in China” mark? Are they really low quality products as they are thought to be?
We do not agree with this statement entirely. The truth always lies somewhere in the middle. According to the research, about 60% of goods are produced in China. Then, considering some common beliefs, more than a half of products found all over the world is worthless. But this is not true, of course. It is enough to take any product and break it down. If we do this, it will turn out that most of units that are necessary to create the final product were made in China, but they are characterized by very high quality.
Some people may be dissatisfied with such products, because there are many different Chinese manufacturers. Some of them offer low prices, what is often reflected in the poor product quality. The others offer higher prices and products characterized by better quality. That is why, it is worth to examine the product and assess its quality before making a decision of buying it.
Are products with the “Made in China” label cheap as it is commonly thought?
The prices of Chinese products have recently increased and they are more expensive than they used to be a few years ago. It happens, because prices are influenced by great number of factors, which are mostly independent on the producer. The main reasons of higher prices of Chinese products are the following ones:
- The business competition on the Chinese market. In China there are many competitive companies. It is worth to mention that there are 77000000 companies registered in China (according to statistics provided by AIC). There are 12000 new companies set up in China every day, what means that annually almost 4 million enterprises are registered there. This is good information for importers, because the bigger the business competition is, the lower prices of the products are. If the companies want to survive on the market, they have to adjust their prices. An additional advantage of the great business competition is a wider range of products.
- Raw material prices. They influence prices of the products in a positive or a negative way due to the fact that in order to produce some goods, the first and necessary step is to purchase the raw materials. When prices of them are high, prices of the products made in China are naturally high too. However, when raw materials cost less, prices of products are lower.
- Labour cost. The Chinese government has introduced such a financial strategy that Chinese currency – Renminbi is supposed to be one of the leading currencies on the foreign exchange market in next years. That is why, Renminbi has strengthened in comparison with other currencies. It means that Chinese people earn much more than they used to earn a few years ago, converting the Chinese currency into US dollars. The living conditions in China have dramatically changed for better. In turn, prices of products are influenced by more expensive cost of labour.
- Foreign exchange rate. Every entrepreneur who buys products directly from China knows that the main currency used while making different transactions is US dollar. Recently, this currency has strengthened in comparison with the other ones, what is not good information for importers from Europe, because they have to pay more, exchanging their national currency into US dollars before purchasing goods.
- Number of distribution channels (agents). The more agents are engaged in the importing process, the bigger amount of money the end consumer has to pay for products is, because everyone wants to earn as much as they can through the margin on selling goods.
Although the prices of products with the “Made in China” sign are higher than they used to be a few years ago, it is still a relatively cheap market for importers from Europe, the USA, or Australia. The main reason for that is great business competition that makes Chinese companies adjust to the situation on the market in order to be competitive. In addition, the labour cost in China is still much lower than in highly developed countries such as the USA, Australia, Germany etc.
We hope that after reading this article, people, who have a bad opinion about Chinese goods and think that they are characterized by low quality, will change their attitude towards such products. It is very important, because we should not generalize and claim that all products manufactured in China are poor. There are also many great Chinese products. Some common opinions are often wrong and unfair. People convey such opinions to each other, but all in all, they boast about recently bought Chinese products. Even when some products have marks such as “Made in the USA” or “Made in Germany”, most of their units had been produced in China. Of course, there are some exceptions. For example, farm produce is usually entirely produced in a country that appears on the label. However, the fertilizer that was used to produce such crops, could have been produced in China and could have had the “Made in China” or “Made in PRC” label.