Low margins in China

shanghai market Rex.jpgChina is not a low wage economy, it is a low margin economy, a contact based in Shanghai told me in a meeting at EPCA.

 

He illustrated this with a tale of his own experiences in the city.

 

Fake DVDs could commonly be had for yuan (CNY) 9 ($1.35, €0.99, £0.84) which was cheap enough for expats, but then one day a colleague was boasting about being able to source them for CNY 5. Then that became the norm, he said.

 

It is the same with made-to-measure men’s suits, he added.

 

A top of the range suit from a good tailor with all the desired detailing: four-button cuffs, monogrammed lining, etc was normally around CNY 6,000 ($900, €660, £560) – but now colleagues have found a place where the same can be had for CNY 4,000 – and now everyone wants that price.

 

And so it goes on, with everyone driving down prices which were cheap enough to begin with, and the hunt for ever-lower prices becomes a national sport.

 

(Photo pirate DVDs in Shanghai Market, Rex)

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