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What it really means to be ‘Made in China’ | CNBC Reports - YouTube
Channel: CNBC International
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made in China we've become accustomed to
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seeing the label on products
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manufactured in the world's
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second-biggest economy but buying one of
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these products in China instead of say
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the US doesn't guarantee you're getting
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a better price so why is that and what
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does it truly mean to be made in China
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[Music]
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to start looking for some answers I
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visited to shopping hubs Los Angeles in
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the United States and Beijing in China
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with 2 1 3 3 thank you fish it Chinese
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tourists have built a reputation for
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being big spenders abroad spending a
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whopping 277 billion dollars in 2018
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much more than any other nationality a
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lot of times people think that
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purchasing something in China will be
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inexpensive but that isn't always the
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case so how much of a difference are we
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talking I sought out four products from
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four popular Western brands to compare
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starbuck H&M Adidas store a Godiva store
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u.s. brands are everywhere I look in
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this area I even just spotted a Red
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Lobster
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to keep things consistent I'm using 2019
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average for an exchange rate the
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products I'm comparing our standard
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black t-shirt hmm grande cappuccino
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Godiva chocolate axis it and an adidas
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hat
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[Music]
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I feel like this shirt would be half the
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price in the US but I'm wrong the shirt
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at H&M is priced nearly the same in the
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US and China a grande Starbucks
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cappuccino will cost you $4 63 cents in
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Beijing but in Los Angeles California
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3 dollars 95 cents in this case of
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Godiva chocolates called pearls is
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priced at $7 24 cents in Beijing but
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only 3 dollars 95 cents in LA and this
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adidas hat will set you back 42 dollars
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27 cents in China nearly double the
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price of a similar hat in the US my
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small experiment has made one thing
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clear pricing is complicated so much so
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that websites have popped up like the
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Mac index a site that compares Apple
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product prices from around the world so
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many ads for Apple here in this area
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according to an analysis by tech
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insights the cost to make an Apple
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iPhone pro is 490 dollars and 50 cents
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yet according to the Mac index the price
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to buy one is one thousand three hundred
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eighteen dollars in Japan one thousand
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four hundred seventy seven dollars in
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the u.s. one thousand six hundred fifty
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eight dollars in mainland China
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and more than two thousand dollars in
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Turkey and Peru prices vary across
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countries due to factors like the demand
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tariffs and tax refunds and then there's
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the supply chain the network of people
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organizations activities information and
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resources involved in the creation of a
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product Apple's current CEO Tim Cook is
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considered by some to be a mastermind in
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supply chain he first joined Apple in
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1998 with a mandate to clean up the
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company's manufacturing and distribution
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over time he closed factories and
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warehouses instead opting for contract
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manufacturers many of those contract
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manufacturers are in China that's great
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for Apple's profit margins but it's
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certainly not praised by President Trump
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who has asked Apple to make its products
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in the US but that may be easier said
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than done if say iPhone production was
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moved to the US instead of China
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different analyses show the price for
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the consumer to go up anywhere from 30
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forty dollars to hundreds of dollars to
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even 30,000 or $100,000 that's partially
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why despite Apple pledging to invest
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more money in America manufacturing it
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maintains China as its hub for making
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its gadgets when you say made in country
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acts it's really an oversimplification
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of what it really is that's omar slim a
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senior portfolio manager at global asset
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manager pine bridge you know when you
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hear about made in this country or that
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country
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it's really quite relative and it's a
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simplification of things because it's
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most likely made in a number of
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countries here's an example let's say we
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want to make Klaus Anya for dinner if
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Jeff cooks the ground beef and prepares
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the cheese Sara makes the tomato sauce
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and layers the ingredients into a pan
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and Blair who bought all the ingredients
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puts it in the oven who gets the credit
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for making the lasagna now let's apply
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that to Apple's iPhone while the phone
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might say made in China
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some parts of it come from other parts
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of Asia Europe and even the US but
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here's the catch even though an iPhone
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may be assembled in China it's still
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tariffed in China as a US product
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because Apple is an American company the
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brand makes that clear with it's a Qing
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designed by Apple in California how
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they're treated in terms of customs they
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will be treated as a US product so
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regardless of where they come it's
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essentially a US product same for
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Chinese products going into the US and
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saves for for instance European cars
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China became a popular manufacturing hub
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in the 1980s after it started to open to
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the world it became known for its cheap
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labor costs blacks regulations and
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business friendly environment as China's
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manufacturing sector grew it took the
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crown from Germany as the world's top
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exporter in 2010 today it's followed
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directly by the USA in Germany while
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Made in China has become synonymous with
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cheap and low quality products China is
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hoping to change that
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in 2015 it launched a made in China 2025
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initiative which aims to shift its
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economy from low-end manufacturing to
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high-end high-tech products and it could
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already be well underway in 2017 Tim
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Cook said
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China lost its place as a low labor cost
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manufacturing nation many years ago so
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if so why is so much of its
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manufacturing done there well because of
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the skill and sheer volume of Engineers
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he said saying Apple's products require
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advanced tooling and engineers in the US
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you could have a meeting of tooling
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engineers and I'm not sure we could fill
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the room in China you could fill
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multiple football fields the us-china
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trade war resulted in a tit-for-tat
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increase in tariffs on many products
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with increasing costs being passed on to
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consumers many companies are looking to
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diversify their supply chain instead of
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being so reliant on China that sentiment
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has only grown following the corona
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virus pandemics hit on the global
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manufacturing industry along that supply
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chain there will be some companies that
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instead of manufacturing it in China if
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they could they could try to replace in
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fact companies including Apple Microsoft
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and Google are reportedly looking into
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moving some of their hardware production
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from China to Vietnam or Thailand but
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that might be harder than it sounds
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but other countries will have a hard
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time to compete along with the fact that
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the infrastructure is China is quite
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good along with the fact that in certain
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countries would not want to compromise
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their relationship with China the
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reality today is that a product likely
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has many components which are sourced
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globally a phone may be designed in the
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US but it's screen could be sourced from
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South Korea the sensors and microchips
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may be from Taiwan or Germany with its
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assembly in China so the next time you
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see a product with the words made in
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China remember that the full story is
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seldom pure and never simple hey guys
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it's Upton thanks for watching check out
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more of our videos and let me know in
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the comments do you think that China
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will remain the world's manufacturing
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hub while you're at it subscribe to our
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Channel and I'll see you soon
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