Everyone needs to shop. We shop for daily necessities, such as groceries, clothing, shoes, , and the many products we need for basic every day living. Sometimes, we shop in a department store when we need to purchase an occasional gift for someone; we also need to shop for lots of Christmas presents every year too. Usually, we will compare prices before purchasing, but we may not realize by much our lives are dominated by the Made in China label on the products we buy. It is overwhelming. Obviously, consumers prefer to pay as little as possible for the same kind of product. In contrast, companies are seeking higher profits by reducing the cost of labor and raw materials.
The first Barbie doll to hit the market in 1959 cost $3 each. Today, the fashion doll can be purchased on sale for $9.99. However, according to the U.S. Department of Labor, the minimum hourly wage of workers has increased from $1.00 to $5.85 between 1956 to 2007. Barbie dolls now sell even cheaper than they did before. How can the Mattel company sell Barbie Dolls at such a good price without inflation raising the cost of the doll?
The answer is that now the doll is Made in China instead of Made in the USA. China has become a major subcontractor for many US brand name companies. ( www.dol.gov, 9/30/2007). Even though the “Made in China” label is inserted on many US brand name products, China should not be blamed for any recalls. An example regarding this issue appeared on September 21, Lee 2
2007, in the news article, “Mattel apologizes to China on toy recalls”. Mattel has recalled millions of toys made by Chinese vendors since August, 2007; and caused a global reaction of fear of products that are made in China. In the end, the Mattel’s executive Vice president of worldwide operations, Thomas Debrowske flew to China to meet with China’s quality watchdog Chief, Li Changjiang, in Beijing. Mattel was willing to take full responsibility for those recalls due to a design defect that was not caused by the Chinese manufacturers. Also, Dewbrowske apologized to the Chinese people and customers who purchased the recalled toys.
This news combined with other recalled products which were Made in China has blown up into a big concern and has resulted in many consumers boycotting products that were Made in China. Personally, I believe that most families who are living at the low to middle income levels will have more difficulty living without products that are Made in China, because of China’s high productivity and low wages which brought the inexpensive products for the benefit of consumers.
First of all, China’s high productivity corresponds with its economic growth and large labor force. Beginning in the early 1980’s, the Chinese government stopped centrally controlling the Chinese economy. China began economic reforms and opened up trade with other nations. China improved and gradually strengthened its relationship with the United States and other countries in order to expand the world market. During the last ten years, China has developed its economy at a fast pace, growing at an annual rate of nearly 15%, which is high in comparison with other countries. The purpose of economic growth is identical to that of increasing employment. As a result, China’s Lee 3
rapid economic growth has set a great demand on labor power; China’s GDP has been growing at an annual rate of nearly 12% in 2005. According to the official statistics, China’s population rose to 1.3 billion at the beginning of 2005, bringing the total of the labor force to 114 million, (its portion in the total population being 88%.) This large scale of the labor force also shows that China has used its high productivity to increase the amount of exports.
China’s exports to the United States have been mostly labor intensive products such as toys, textiles, shoes, televisions, DVD players, and furniture. But now among those exported goods, there is a large portion of US brand name products that have been processed in China and exported back to USA and worldwide. Included in these companies are Mattel Toys, Coach, GAP, and Ann Taylor. According to the U.S Census Bureau, foreign trade statistics dated July, 2007, United States imports from China rose to $176 billion, but exported only $36 billion to China.
The large deficit scale rate ( 5:1 ) shows that most consumers in the United States purchase more products from China than products that are sold to China. In addition, Chinese goods may not make up everything we buy, but they sure are major portions of them. Statistics also show that China is the 2nd largest trading partner with the United States, and the rate of total trade is 12% which is only 6% lower than the U.S.’s largest trading partner –Canada. (www.census.gov, 9/30/07). Moreover, the low costs of Chinese labor impact world trade.
Two major reasons which account for the low wages of Chinese labor. The first reason is the rapid growth of labor resources from urban and rural areas which result in a Chinese labor surplus. Before the 1980’s, 98% of Lee 4 industries were operated by the Chinese government. A job was assigned to each person, including the graduate students from school. When China was speeding up economic growth after 1989, many private industries started development and took over the market; then many government industries were forced to close and lay off many employees. Therefore, large number of laborers flowed into the market which reduced labor costs, especially the low wages from the rural areas.
According to statistics, the average monthly income for a rural employee is only $55.00 in US funds. This amount may vary a little in different countries. Another reason too is due to the “sweatshops” in the China, which have workplaces crowded with overworked and underpaid employees. Since Chinese labor laws are slack some manufacturers get by with hiring old women and children, and paying them a much lower wage than other laborers.
Because the unemployment rate in rural areas is higher than in urban areas, many rural employees seeking a better wages in the cities. Employees work more than twenty hours a day, but only earn a monthly income of around $150-200.00 in U.S. dollars. In spite of the fact that some raw materials may harmful to employees many factories still use them for the production of items such as leather good, certain kind of printing, and painting.
Also, the hand labors in China are paid much lower wages than they are in others countries. On the other hand, the U.S. Labor Department has continually increased the minimum hourly wage; and the U.S. has strict labor laws that restrict and limit factory development, none of these exist in China. Since all industrialists seek the best labor bargains to increase the competitive power in market, they begin to set up the factory in China. Presently, GM has closed many U.S. factories and then moved their main production lines to China. Mattel Toys produce 98 percent of their toys in China.
Beside, those national U.S. companies, other industries all over the world have branched out to China too. Some economic experts even forecast that China could overtake the US and Germany to become the largest exporter in the world in the next five years. (www.seftb.org 10/1/07) China use of high productivity and low wages to develop their wide reach in the world market, also benefits both investors and consumers.
Big companies are willing to reduce retail prices to influence the customer’s purchase after decreasing the costs on labor, raw materials, and operations. Since the price of products becomes cheaper and more affordable, this neatly fits the demands of low to middle income consumers. In general, there are only two things that matter to most American consumers; it’s time and price. We want it now, and we want it cheap.
Almost everyone’s standard of living is improved by being able to purchase less expensive product no matter where they are made. And for now at least, many of those cheap products come from China. I believe that if we don’t have the low priced products which are “Made in China”, many American women, including me, will also lose the most interesting thing in their lives – shopping for bargains!