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The Hidden Costs of Bargain Electronics
Fill Dirt writes "Mike Langberg of Knight-Ridder newspapers wrote an interesting article on the the hidden costs of bargain priced consumer electronics. I saw it in the Seattle Times business section with the title Can't lose with bargain DVD player, but low cost carries price ."
I have seen the real hidden costs of bargin equipment!
:)
As many great deals that I have found in fatwallet forums, I'll be damned that it seems I get more and more broke everytime I visit there...
Of course, whenever my bookoo of rebate money rolls in, I'll be doing much better.
Damn you fatwallet!
AC
It all goes to China, where it's disassembled by teens in makeshift tents looking for a quick way to earn a buck (and perhaps die because of the dangerous toxins in CRT screens.)
Life is just grand, isn't it?
Philips, which along with Sony and Pioneer has hundreds of patents covering all aspects of the DVD system, is administrating the granting of licences and the collection of royalties, which are then shared equally between the three manufacturers.
The Dutch electronics giant has set up a dedicated website -- www.licensing.philips.com -- which features a list of licensed manufacturers from its licensee database. Philips maintains the website is kept up-to-date with the latest licensing information.
A leading importer of DVD players, who asked not to be named, told ERT Weekly: "This is big news. We have found most low-cost DVD players do not hold the necessary licences.
A Philips spokesman said: "There are a number of manufacturers that don't have the necessary licences.
IIRC but cost of a licence is around $25.
From the article:
no assembly-line workers in China able to enter that country's growing middle class
Yes, the companies hiring these people are really holding them back. Just imagine if they couldn't find a job how quickly they could join the growing middle class!
Please, give me a break. The economy in China is completely different than what this 'journalist' is used to. The number of people living here just boggles the mind. I would say that over 90% of China's problems can be traced back to the fact that it's population is FAR too high. Too many people, not enough schools. Too many people, not enough jobs. Too many people, not enough land. If the workers had something past a middle school education, then yah, maybe they could enter the so called middle class. But they don't. Usually the workers are glad they have a job at all. If they don't want the job there's plenty of other people who would be glad to take their place.
Even though their wage is well below the poverty line in the west, they usually have an average salary for the area they're living in. For instance, at the kindergaten I'm working at now the Chinese teachers get around $100-120 USD / month. The cleaning staff gets perhaps around $70-80, I forget exactly. And these are considered good wages for the job they are doing. Hell, I don't think there's a single person at the school who doesn't have a mobile (cell) phone! And remember this is in a large metropolitan Chinese city, not out in the country where most of the manufacturing plants are. The cost of living is even lower where most of the plants are.
Do not anger the worm.
The reason they had that level of quality was they pre-tested and stress tested each component that went into the production of their consumer electronics. They spent literally billions of dollars on test equipment from companies like Aetrium and others.
As soon as Sony (and other electronics manufacturers as well) started seeing serious competetion coming from cheap Chinese imports, the easiest way to add to their bottom line was, among other things, to cut out the pre-testing.
The failure rate of each individual electronic component is pretty small, but when you have several thousand components that go into a VCR or camcorder, each component having a .001% chance of failing, the combined failure rate of all the components amounts to 1-2%. Now, when a particular component fails, the unit may not die, but something marginal like picture quality will suffer.
Sales at companies that sold test equipment plummeted - I know from personal experience.
Nowadays, a Sony VCR is pretty much just as crappy as a cheap Chinese import. The premium you pay goes to marketing, product design and adding sometimes unique and hopefully useful features - which usually backfires and winds up being a bloated and unusable product.
The lower cost leads to higher failure rates in a shorter time span, but now the technology has become disposable and it is not uncommon to replace these cheap items every 3-5 years instead of 5-7.
Think about it: When was the last time you actually took an electronic item in for repair?
I bought a camcorder last year. The tape handling sucks, it will casually eat the occasional tape. The batteries that came with it? Lets just say that I've had erections that have lasted longer. Its not a problem with the battery, but something about the unit is just sucking the juice.
When I inquired about warranty repair I was told that the unit had a 90 DAY WARRANTY! And YES, it was purchased NEW, not a refurb. I was, needless to say, shocked - but what else should I expect from our new, disposable goods economy.
Good security is based upon reality and common sense. Common sense is a function of having common knowledge.
Look who didn't read the article. The author mentioned this woman and says now it has come to light that she's a former Wal-Mart employee, and has a history of "slip and fall lawsuits" and worker compensation claims.
What time is it/will be over there? Check with my iPhone app!
if a typical Japanese worker had their way, they'd work Saturdays too
As someone who has lived and worked in Japan, I'd like to correct this. No one I knew enjoyed all the unpaid overtime. They did it because they felt compelled to by their company.
Actually, there was one programmer who would have worked even if the boss/company hadn't demanded it, but the other 500+ would gladly have taken the time off.
In fact, in seven years, I met three people who told me they enjoyed their work. One was the aforementioned programmer, the other two were the presidents of their companies.
It isn't "miraculous" at all. It's obvious and the last two centuries have largely shown determined efforts to prevent this from happening because it is so obvious.
There are only so many things that can be imported. Take, for instance, Kuwait. 95% of Kuwaiti exports are in petroleum, which makes up over half of GDP, since it is essentially their only natural resource. Nearly 100% of food is imported as agricultural capacity is nearly zero. The United States, on the other hand, has no reason to import anything except to lower the price. There are very, very limited exceptions, mostly in precious and semi-precious metals used in manufacturing where trading is based on necessity. Relying on unnecessary imports (note that something being "cheaper" does not make it "necessary") creates a succession of structural unemployment, depressed wages and/or government subsidy to keep uncompetitve sectors from producing millions of homeless people. At some point you simply must accept that the guy across the street in New York will not be able to produce anything for you at the price available in New Delhi and that some services must be provided in terms of your local economy, unless you envision a future at the homeless shelter.
Realize what is happening: production is MOVING not dramatically INCREASING. If production moves and is not quickly replaced, your GDP suffers because, obviously, you're no longer PRODUCING. We haven't found anything yet to replace what we're shipping offshore, so hey, if you've got any ideas on the "next big thing" that can only be produced here, you just fire away.
The total global economy is now about $110 Trillion, or about ten times that of the United States. The total global population is about 6 billion. That's an average GDP per capita of $18,333/year, which is HALF the current GDP/capita of the United States, but it is twice that of Poland and nearly five times that of China and almost ten times that of India. Now, considering the amount of production moving to China and India, which represent a third of the world population, and that the United States represents 10% of the global economy, one can assume that for every $1000 increase in GDP per capita in China and India, it will cost the United States $868 in GDP per capita. Why? Getting India and China to $18k/capita through exports would take transfers of $34,000,000,000,000 per year in production, 10% of which by definition would come out of the United States (in reality the US takes 20% of their exports, while India imports half as much and China practically nothing), unless new production is created, which to date has not happened (remember all the talk of "jobless recovery?"). That $3.4 Trillion would represent nearly a third of our economy, say, equivalent to losing California, New York and Texas.
Since 1983, GDP in real terms has only increased by about 18% while imports have increased from 8% to roughly 14% of GDP. In current dollars, that's $750 billion in production already shifted, equal to $2,900 in GDP/capita. The minimum wage of $3.80 in 1983 would require $5.70 today, but that wage is now only $5.15, which is a loss of 11% in standard of living, or about $1100/year. Since this is generally the wage we pay our manufacturing line workers, do you think these things are unrelated?
I don't reject the idea of equalizing incomes globally through trade. However, the current pace is suicidal especially when thinking in terms of moving production to countries with more than five times the human resources and one tenth the cost of labor already used to export to the United States three times what is imported. That kind of relationship cannot possibly be mutually beneficial to any sustainable degree. We already have a trade deficit of nearly $550 billion, which is $2000/year for every man, woman and child in the country, thus a family of four is already supporting $8,000 in trade-related waste. Escaping that scenario would take a miracle that cannot be imported from China.