"Made in China" Foreign Brand Goods Cost Three Times More in China

"Made in China" Foreign Brand Goods Cost Three Times More in China
Apr 02, 2010 By eChinacities.com

Made in China” brands/products and their different prices in China and in the U.S.


Costs in China

Costs in U.S.

Franchise Houses

Other Stores


Discount Stores

Levi's jeans

700 RMB and up

100 – 400 RMB

30 - 40 USD

15 -30 USD

ECCO shoes

1000 RMB and up

500 RMB and up

60 – 100 USD

40 -60 USD

Coach bags

4000 RMB and up

2000 RMB and up

200 – 300 USD

150 – 200 USD

Nike sneakers

668 RMB


32.99 USD


Marlboro cigarettes

150 RMB/carton


35 USD/carton


Armani suits

30,000 RMB


1000 USD


Italian dress shoes

1500 RMB


50 USD


Cashmere sweaters

1000 RMB


100 USD


HP Pavilion DV4i laptop

8000 RMB


800 USD


1 USD = 6.8267 RMB

This Spring Festival break, thousands of Chinese tourists hit upscale boutiques and retail stores dotting along Fifth Avenue in New York City. And many of these Chinese tourists had a special preference for “made in China” foreign brands, including luxury goods, name-brand clothes and big-brand sneakers. The Chinese Lunar New Year became a sort of “golden week” for NYC and brought on a new holiday boom to New York retailers. According to research done by the US Department of Commerce, 90% of Chinese tourists came to NYC to shop.

More and more foreign luxury brands are quick to realize the big potential of the Chinese consumer market and the chance to fully exploit the cheap labor available in the country; big brand clothing and jewelry companies outsourced the manufacture of their products to sweat shops in China and then slapped on the shiny labels and have these goods shipped to upscale markets all across the globe.

While it should be logical then that goods “made in China” should be the least expensive for consumers in China, as you can tell from the table set forth at the beginning of the article, this is not the case at all. You can get a pair of Levi's jeans for 15 to 30 USD (100 -200 RMB) in a discount store in the U.S., and yet you'd have to pay at least 700 RMB for the same pair of jeans in China. Exported goods were sold for a third or a fourth of the retail price in China overseas. Why is this case?

1) A few foreign brands are monopolizing the Chinese market

China may be the largest manufacturer in the world, but the brands and products being manufactured are owned by foreign companies, and these companies set the market prices, not the manufacturer. And also there is a healthy competition in the overseas markets for foreign brands and this is lacking in the Chinese market. When there is a monopoly, the prices are inevitably higher for lack of competition. And high import tariffs, huge cost and effort to build and nurture a market from the ground up, coupled with a lack of anti-trust regulations in place, are all the reasons making it hard for more foreign brands to enter the Chinese market.

2) High distribution and marketing costs for selling goods intended for export in the domestic market

Even though many Chinese companies that are contracted for manufacture and processing of goods for export do complain about the low profit margin (usually only 5-6%), but the high distribution and marketing costs of turning these goods for sale in the domestic market are also an insurmountable reality – at least for the time being. Companies in the overseas markets all have mature sourcing teams and agents in place to negotiate with the suppliers for better and uniform deals and prices. On the other hand, only a handful of companies in China have sourcing teams and agents in place to negotiate long-term business with suppliers. And also for the lack of a better credit system in China, suppliers are expected to shoulder the production cost first and get paid later; foreign contracts on the other hand are a pure matter of delivering the goods for payment, with no added burden of distribution and marketing. So even considering the low profit margin, suppliers are better off manufacturing goods for export rather than turning them over for sale in the domestic market.

3) Chinese wealthy can afford to pay

Foreign name brand users in China are mostly middle and upper class city dwellers and white collars. Even if the companies can cut back costs by doing away with brick-and-mortar shops and sell their products online, consumer demography and market share will still remain the same; and most of these customers can afford and would prefer to pay the added cost of being able to shop in a boutique and specialty shop.

Source: gcpnews.com


Related Links:

Top 10 Chinese Cities That Love Luxury Brands the Most
The top recognized fashion brands in China
Top 10 Chinese Cities the Millionaires Choose to Live


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