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I"m not really sure. I'm not an expert on all of this, but I've sourced from the US and China, so this is my take. The problem is that we (the public and vario

I"m not really sure. I'm not an expert on all of this, but I've sourced from the US and China, so this is my take. The problem is that we (the public and various business owners) are still living under the assumption that it's the year 2000, when you could land from China for $3 and sell something for $30. This isn't true in the "New China," where wages are catching up to the US. That $20 item you are buying on eBay has a COL of $15. There are three major issues: 1- China has a TON of engineers. This isn't so true in the US. This means that China can get from spec to market in short order. In the US, spec to market is much slower. 2- Supply chain. In China, the manufacturer, design team, broker, sales, printer, and so on are all in one building. The US supply chain is incredibly convoluted, featuring 5 layers of people who's sole job is to prevent the buyer from contacting the factory directly. 3- China still has an unfair advantage. When you buy a product, a large chunk of that cost is shipping ("free shipping" is up to $7 that you don't see). This is doubly bad for the supplier, as they have to work out the shipping price for China -> US and US -> customer. Ever heard of e-packets? It's actually cheaper to use USPS ship from China -> customer than it is to ship a package US -> customer, even if the customer lives across the street. In short, China has some inherent advantages, but the US also does many things that give China an unfair advantage. Last but not least, the US supply chain is a complex web of back-patting that does little more than destroy itself. There are plenty of options for cheap US manufacturing, it's just that there is no scale for that, and there are many other small issues. The US has to do much more work than open up a new factory down the street. If we are talking about raw per piece production, the US often does it cheaper than China. It's all the other things that raise the price.

nostrademons 8y ago
This mirrors what I've heard from friends & acquaintances that are doing either hardware hacking or import/export in China. It's rapidly becoming a myth that Chinese products are cheaper because they don't pay their workers or because they manipulate their currency (both of which they've done in the past, but as with most market forces, they can't sustain forever). Rather, the Chinese are innovating heavily on how they make products, and doing everything possible to squeeze out waste in the process. They're simply making things more efficiently than we do in the U.S. All of this is fixable, but requires that all the layers of management between U.S. factory workers & customers needs to stop doing what they're doing and in many cases eliminate their own jobs. And that is unlikely to happen, because they are the decision-makers on layoffs and it's a lot more profitable to lay off the factory worker who actually produces the product than themselves. IMHO the U.S. desperately needs a lot of bankruptcies, a few enterprising individuals with knowledge of full manufacturing processes to start new firms, and a financial system that directs money to people who actually have domain expertise rather than folks they went to college with, but good luck on that.
losteric 8y ago
> The US supply chain is incredibly convoluted, featuring 5 layers of people who's sole job is to prevent the buyer from contacting the factory directly. Can you expand on this? Who/what would prevent me from directly working with factories?
- dizzystar 8y ago
  Well, you are dealing with a lot of partners. Let's say you want to create a unique mug for your company. In general, you can do this pretty easy by calling a promotional products distributor (you can't contact the supplier directly), but you are bull-headed and want to do it yourself. You decide you want to buy something USA-made. Well, you contact the factory and you get yelled at for not calling their broker. (I contacted an unnamed factory in Texas and they were demanding all names and numbers, implying heads are rolling). You call the broker. You contact the broker and she tells you that you can't really order from her, and you have the option of contacting a printer in Chicago. You contact the printer in Chicago and now they are upset because you aren't ever supposed to call that factory, never mind you have a retailer license. Okay, well... you call their broker, and well, yeah, they can do that, but you have to use their preferred artist located in NYC. Got everything wrapped up now? Nah... you have to find someone to do the mold, and no, the factory doesn't deal with that. You contact someone in Colorado and you get quoted $15,000 for an injection mold. So you go back to the broker who is... well, you don't really know who to contact, but it turns out that the Chicago printer isn't tooled to do anything but the shapes they are getting from Texas (you don't learn of this for 2 weeks because that broker is too tied up with other things). You call up Texas broker and she says "yeah, we do custom molds, but you still have to use our preferred network." You ask if they can do orange and they say no, they only do red, black, and blue. Sorry. You say to hell with it, call China who can do all of this in one phone call. You figure the cost is about the same (though the mold is only $5,000) and can get an sample in 2 weeks. They also offer to send you 15 different colors because they can. I guess that doesn't explain why this happens. The reason is that there are a lot of "policing societies" that factories, suppliers, brokers, and distributors pay good money in order to keep the supply chain in check. There is no dirtier word than "double dipping," which means you are acting as supplier and distributor. Once you do that, you end up losing your society membership and you are basically toast. There is a bit of inflection point these days. Suppliers / manufacturers are starting to sell direct. The distributors don't really like that the supplier / distributor relationship is breaking down, but it is slowly happening in some segments. In sum, there really isn't a such thing as a "middle man." There is a whole party of people involved in everything that you buy. It's just a matter of how deep the rabbit hole goes. China smartly chose to streamline the process.

nostrademons 8y ago

This mirrors what I've heard from friends & acquaintances that are doing either hardware hacking or import/export in China. It's rapidly becoming a myth that Chinese products are cheaper because they don't pay their workers or because they manipulate their currency (both of which they've done in the past, but as with most market forces, they can't sustain forever). Rather, the Chinese are innovating heavily on how they make products, and doing everything possible to squeeze out waste in the process. They're simply making things more efficiently than we do in the U.S. All of this is fixable, but requires that all the layers of management between U.S. factory workers & customers needs to stop doing what they're doing and in many cases eliminate their own jobs. And that is unlikely to happen, because they are the decision-makers on layoffs and it's a lot more profitable to lay off the factory worker who actually produces the product than themselves. IMHO the U.S. desperately needs a lot of bankruptcies, a few enterprising individuals with knowledge of full manufacturing processes to start new firms, and a financial system that directs money to people who actually have domain expertise rather than folks they went to college with, but good luck on that.

losteric 8y ago

> The US supply chain is incredibly convoluted, featuring 5 layers of people who's sole job is to prevent the buyer from contacting the factory directly. Can you expand on this? Who/what would prevent me from directly working with factories?

dizzystar 8y ago
Well, you are dealing with a lot of partners. Let's say you want to create a unique mug for your company. In general, you can do this pretty easy by calling a promotional products distributor (you can't contact the supplier directly), but you are bull-headed and want to do it yourself. You decide you want to buy something USA-made. Well, you contact the factory and you get yelled at for not calling their broker. (I contacted an unnamed factory in Texas and they were demanding all names and numbers, implying heads are rolling). You call the broker. You contact the broker and she tells you that you can't really order from her, and you have the option of contacting a printer in Chicago. You contact the printer in Chicago and now they are upset because you aren't ever supposed to call that factory, never mind you have a retailer license. Okay, well... you call their broker, and well, yeah, they can do that, but you have to use their preferred artist located in NYC. Got everything wrapped up now? Nah... you have to find someone to do the mold, and no, the factory doesn't deal with that. You contact someone in Colorado and you get quoted $15,000 for an injection mold. So you go back to the broker who is... well, you don't really know who to contact, but it turns out that the Chicago printer isn't tooled to do anything but the shapes they are getting from Texas (you don't learn of this for 2 weeks because that broker is too tied up with other things). You call up Texas broker and she says "yeah, we do custom molds, but you still have to use our preferred network." You ask if they can do orange and they say no, they only do red, black, and blue. Sorry. You say to hell with it, call China who can do all of this in one phone call. You figure the cost is about the same (though the mold is only $5,000) and can get an sample in 2 weeks. They also offer to send you 15 different colors because they can. I guess that doesn't explain why this happens. The reason is that there are a lot of "policing societies" that factories, suppliers, brokers, and distributors pay good money in order to keep the supply chain in check. There is no dirtier word than "double dipping," which means you are acting as supplier and distributor. Once you do that, you end up losing your society membership and you are basically toast. There is a bit of inflection point these days. Suppliers / manufacturers are starting to sell direct. The distributors don't really like that the supplier / distributor relationship is breaking down, but it is slowly happening in some segments. In sum, there really isn't a such thing as a "middle man." There is a whole party of people involved in everything that you buy. It's just a matter of how deep the rabbit hole goes. China smartly chose to streamline the process.