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 ."

Comments

Pollution?

[grioghar]

Seems to me the biggest thing is the pollution generated by these bargain electronics. If it's dirt cheap, then if it dies, you throw it away, you buy more dirt cheap.

Not so good for our environment.

Re:Pollution?

[cgranade]

Of course, the same argument can be made for many things. I have the same feeling about American cars... you're likely to have a Ford or GM last 5 years. Now, before everyone floods me about how "my truck has been around for 40 years," let me pre-emptively defend myself: 1) trucks are a little bit different still, 2) there are always exceptions (I have a friend who loves his CyberHome brand DVD player) and 3) well, 20 or 40 years is a long time removed from now.
Getting back OT, it seems like the parent poster is right on, but I would extend this argument to a much larger scope of problems, and one that doesn't just affect China, but all nations.

Re:Pollution?

[smchris]

>There's so many more workers in China it's only a matter of time (and very little at that compared to the US, IMHO) before workers there demand more, and decide to demand it in groups.

>>Well, now you're talking sense. Because an overabundance of workers in our workforce certainly translates to power for those workers. Oh wait, it doesn't. 10 workers for every job usually means that if you even hint at unhappiness with your lot, they can find others to do it without complaint.

Both of these viewpoints have some truth. Which is why I'm driven crazy by the U.S. neocons and libertarians who want to take us back to the glorious 19th century and equally by the slave reparation people who want to be paid off because their ancestors were slaves.

Doesn't anybody have a basic knowledge of the less glorious underbelly of U.S. history? On the latter point, let's "get medieval" in a butal, 19th century kind of way. Hell, a slave was property. An owner was stupid if he didn't take care of his quite expensive "investment". On the other hand, a nineteenth-century factory worker could be worked to death in much the same conditions that prevail in third-world factories today. Let him die. The factory owner didn't have an investment in him. There was always another Irish potato famine refugee to take his place.

Obviously, the juxtiposition isn't to promote slavery as the lesser evil (which is perhaps worth pointing out to a handful of countries the internet could touch), but merely to highlight the unforgivingly brutal position of the U.S. worker in the 19th century that is so often neglected. Upton Sinclair's book , The Jungle c. 1900, has a chapter where a worker falls into a meat grinder and the foreman doesn't shut it down. That didn't promote sympathy for worker safety regulation. It promoted sympathy for better food inspection. The worker's movement took more than another decade to get rolling -- with no small inspiration from Lenin.

Even then, President McKinley wasn't above calling out the Guard to kill striking workers. There is no reason to believe China will be any prettier.

So even though both people above are right, the conditions are not entirely dissimilar from 19th century America. There were ample replacements willing to be worked to death then too. Therefore, the cycle has to be broken by resistance from the people. Rather amusing when one first thinks of China, in name a "people's democracy", isn't it?

This line of reasoning only superficially sounds communist or revolutionary to current U.S. tastes. Probably one of the reasons things went so well for so many for so long in the latter half of the 20th century in the first world is that capitalist governments said, "Well, you aren't getting communism, but we will support, and even promote, unions." Hence, a somewhat "pure" socialist government presence that encouraged wealth distribution without necessarily promoting the government programs conservatives abhor. In no way "communist" but also in no way "pure, unbridled capitalism".

Now, if one _really_ wants to cause trouble: the average secretary, generally non-unionized, with a computer today is doing the work of ten secretaries with typewriters? Her relative wage compared to the company owner today is at what percentage.......???

Sometimes you get what you pay for

[Richard M. Nixon]

Sometimes you get what you pay for, but you have to pay attention.

One thing the article doesn't seem to mention is that it is usually the no-name less expensive DVD players that allow you to play other region DVDs.

Is there a middle ground where you can get a cheaper DVD player that plays foreign DVDs, doesn't allow blocking of skipping commercials that some DVDs force you to watch, and is made with "fair-trade" labor practices?

Being able to play PAL formats as well as divx cdrs would be nice too.

Oh, and if you buy a cheap DVD player, or whatever, and it doesn't work then take it back.

You know..

[boomgopher]

Shit is so cheap these days, I actually feel bad when I shop now. I'd rather pay a lot more for niceties like DVD players knowing that they weren't built by slave labor. Workers in China are treated like shit, but what the hell do you do? Every damn thing you see is made there these days...

Below is a response I recieved from the CEO of an american toy company I contacted after I read about the conditions of a factory used by them in China. It reeks of bullshit, but what can you say in response?:

Dear Mr. XXXXX:

We were very concerned to read your e-mail regarding some misinformation you
may have received regarding our manufacturing practices.

We are a global provider of game and toy brands for children, and the
conditions under which our products are manufactured are a matter of serious
and long-term concern to XXXX. We are committed to ensuring that our
products are manufactured under safe, humane and non-exploitative
conditions.

In fact, as early as 1993, XXXX established its Global Business Ethics
Principles ("Code of Conduct"). Participation in the XXXX program is
mandatory for all of our suppliers and vendors. Among many important areas,
the Code of Conduct governs:

* child labor --no person younger than 15 or younger than the age for
completing compulsory education in the country of manufacture (where such
age is higher than fifteen) may be employed to produce XXXX products -- In
China the minimum school age is 16;

* working hours and compensation --employers must comply with all
applicable wage and hour laws or, if prevailing industry wage standards are
higher, then employers must comply with or exceed these standards --In
China, minimum wages are set by province or by city, which may cause some
confusion, when reported by those unfamiliar with the process.

* forced, prison, or indentured labor --any person employed to produce
XXXX products must be voluntarily employed, except that rehabilitative
programs which provide for employment may be assessed by XXXX on a case by
case basis;

* health and safety --employers must operate facilities in a healthy
and safe manner, including, but not limited to, providing fire prevention,
first aid, and hazardous waste disposal;

* abuse and discrimination --employers must treat employees with
dignity and respect and shall not subject employees to abuse, cruel or
unusual disciplinary practice, or discrimination;

* freedom of association --employees have the right to choose (or not)
to affiliate with legally sanctioned organizations without unlawful
interference; and

* monitoring by XXXX --XXXX has the right to conduct periodic
on-site visits of working and living conditions, audit the production
records and practices of the employers, and require employers to promptly
address compliance issues or face termination by XXXX. Following initial
audits to approve use of a factory, XXXX conducts unannounced follow-up
audits.

As indicated above, XXXX's Code of Conduct clearly sets forth the
standards under which vendors may manufacture XXXX products, with auditing
and monitoring rights for XXXX. All factories located in the Far East
manufacturing XXXX products are audited by XXXX and by independent firms
hired by XXXX

Over the years, XXXX has successfully worked with its manufacturers to
correct any unacceptable practices discovered during the course of our
audits. New factories must correct any audit findings before they are given
any XXXX orders, and existing vendors must correct any findings within a
specified time frame depending upon the severity of the issue. Although
serious violations or failures to make corrections are rarely experienced,
XXXX has in fact terminated vendors for failure to comply.

XXXX has also been a leader in the worldwide toy industry as a member of
the Toy Industry Association, Inc. ("TIA") and

Re:buying more expensive items won't help

[James in Iowa]

Europe and the US went through periods of horrendous exploitation and abysmal working conditions before workers demanded, and got, improvements. China will probably follow the same path if given a chance.

Amen! Although I would say that the reason developed countries' workers received improvements is due to increased productivity; i.e. the workers were more valuable then the pitence that they were paid.

Same thing should happen in China and other third world countries if the US, Canada and Europe give them a chance. The Chinese workers will gain some skills on the assembly line and then they'll protest for and get higher pay or better working conditions.

Now before I get flamed for being naive or what not, I must point out that this is happening in the Chinese toy industry. Workers their have to master the skills to put together the current "hot" toy whether it is a Furby or an XBox. They've gained some skills in doing this and now they have better working conditions. The Economist had an article about this a couple of years ago.

Re:This speaks for itself.

[dafoomie]

It's cheaper in China because of the near slave labor conditions, lack of labor, safety, and minimum wage laws, and China's artificial (and illegal) manipulation of its currency. We shouldn't have to compete with that. Unfortunately we do. But I might actually -want- to play a little more for a DVD player made in the USA, or at least a country with better working conditions, to 'vote with my dollars' against this stuff. Theres nothing wrong with it not being made in the USA, but there IS something wrong with how things are in China right now.

Intercept a Fry's clerk and insist on the item

[robogun]

From the article: First stop was the Fry's Electronics in Sunnyvale, Calif., shortly before 11 a.m., where I discovered early-bird shoppers already had snapped up the Mintek models at $26.99.

Fry's stocks the loss leaders throughout the day. It pays to ask a clerk if there are more in the back (using the tone of voice that you KNOW there are more). Last week they had 250gb WD drives on sale for $149 after rebate ($219 OTD). Of course the shelf was empty when I got there. I asked the clerk and hung out 20 minutes, until he brought out four more from the back (spying the screen, I saw they had 140 units on hand).

After burn-in (do NOT cut out the UPC for rebate until after burn in) I realized I had no way to back up a drive this size. So two days later I went back and got another, using the above process.

Re:So True

[Afrosheen]

That has to be the most insightful yet resigned statement I've read all year.

Does this mean that if we buy MORE dvd players, the Chinese folks making them will have a better life? Maybe this is a rare instance where the opposite isn't true.

Parts ultimately use US or 1st world technology.

[openmtl]

Pull apart a DVD. You'll find usual metals, plastics and components you'd expect in a high tech product. Reduce each of those parts to its raw materials and you'll find gold, copper, oil, iron, aluminum and a whole range of other more complex raw materials.

These raw materials will have been abstracted from many parts of the world using a mixture of Japanese, European and US mining technology. Many of the companies would be US influenced even if its for geological technology (assaying, and other high tech geophysics fields like seismics, microgravity).

The chips are probably fabricated in a plant that uses US technology even if its physically located in a cheaper country like Malaysia.

Metal pressing plants maybe Japanese or Korean but stamping dies may be cut with tool bits from Europe using US origin CAM. You wouldn't know unless you looked at a specific plant but you can be certain that the computers were probably not Chinese and most precision machine tools are not Chinese.

The semi/finished parts shipped from wherever to China using Korean or Japanese made ships. Flagged as Liberian or Panama using British officers but cheap locals. Ship runs on Saudi fuel traded out of Singapore using US made computers to settle transactions. Trucked from dockside to wherever in China and now its assembled in factories. The factory conditions may not be perfect by US middle class standards but its a job. That ship could equally easily drop off those parts in any country in South east Asia and the local truckers would be happy to transport those parts. Thats an important point !

Assembled, boxed and shipped to US. Trucked from US (LA) dockside to transhipping warehouses, then to stores. All the way US labour used at US ports, trucks and warehouses. No one questions the LA dockers pay conditions !

The author is just looking at one or two intermediate steps in the whole of the product life cycle in what looks like a political agenda. The whole system is tuned to shift the parts to any country at the drop of a tool. This is capitalism (well Adam Smith's form of competitive advantage) and it works because the alternatives have been repeatedly shown to not work. Eventually China will be too expensive and work will flow to even cheaper countries. Until that time you'll do a lot more harm by denying the Chinese labour force their cut because you don't feel you could stomach that work.

He seems quite happy to try to export US labour laws into China but I imagine there would be a bit of a cry from him if Europeans tried to export EU labour laws to the US !

Re:This speaks for itself.

[C10H14N2]

Denon manufactures DVD players in Fukushima, Japan. Linn manufactures DVD players in Scotland and Krell does so in Connecticut.

So no, you can't waltz into Wal*Mart and find a non-chinese model, but if you truly do want to support labor standards with your purchases, you DO have choices. Of course, to purchase a DVD player manufactured by Krell in Connecticut, you will have to cough up $8000, not $80. The Scots will provide you with a Linn model for around $2200 and Japanese labor will produce a Denon for an average of around $800, with the cheapest being about $300.

So, really, how dedicated are you to the cause?

Re:Mass production electronics...

[Jarnis]

EU is on the right track here;

All durable goods (well, at least electronics, computers etc - I'm pretty sure it covers lots of other products as well) have 2 year 'warranty' pretty much required by law. Basically the law states that regardless of actual warranties given by the manufacturer/importer, the retailer is responsible for the product to last the expected life of such product. If it fails earlier, it's assumed that the product had a manufacturing and/or desing defect, and the consumer is entitled for a repair, replacement or (as the last resort), refund. For consumer electronics and computers this period has been translated to 'two years' - obiviously excluding such consummables as batteries, ink cartridges etc.

Unsurprisingly not many retailers carry POS chinese 'no brand' crap, because if the manufacturer does not offer a solid 2-year warranty, the retailer will end up paying the replacements out of his own pocket. That, or they get blasted to bits by the consumer watchdog organization. So for manufacturers to do business in the EU area, they have to give 2-year warranty, or retailers won't stock their stuff.

Which is good for the consumer, as you can realistically expect certain durability from the stuff you buy.

Of course in the USA, your legislators could never pass such pro-consumer laws. The manufacturers would pay off any such attempts so they can keep churning out the cheap crap that is designed to last three months and then blow up.

Re:Short term, yes. Long term?

[shepd]

>This is a forumla for making the rich richer and the poor poorer in the long run.

I won't disagree with your argument at all (it's very correct), except this point.

Doesn't it seem obvious that this is a formula for improvement? The "bottom" will always get higher. Heck, look at minimum wage. Most people measure minimum wage for Chinese workers in cents. Imagine getting paid like that at the start of the industrial revolution in the US! You'd be a tycoon!

As these manufacturers look for cheaper wages, the bottom will rise. The fact is that in life there is always a bottom and a top (unless you live in a communist country, like Cuba, and even then that's not at all true). That's the way things go. The best you can do is improve living for the bottom while you improve living for yourself.

That's what this formula does. When China unionizes, it will be *because* of this formula. Other countries a little slow on the start of the revolution have already been forced to improve workers rights, for example, look at Japan. This formula will be what forced China to get workers rights. Without this formula that would never have happened! And then, the next country it "preys" on will benefit. And then another, and another, and so on. The amazing synergy continues.

It really is a miraculous system, when you think about it.