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DVD Player Maker's Margins just $1
callipygian-showsyst writes "This news.com story tells how Chinese DVD player manufacturers are only making $1 margins per player! The story says that 'Commoditization is hitting China's DVD player manufacturers hard, according to researcher iSuppli, Between January and May, the average selling price of a DVD player exported out of the Guangdong province came to $40.80, leaving just about $1 in profit margins for the manufacturers.'
You wonder if other business, like low-end PCs hardware, are in similar trouble."
...since they sell their hardware at a loss. (Granted, they get money from the service subscription.) Microsoft loses billions of dollars on the XBox, to sell games. This is common, and will be getting moreso. It won't be long before hardware is essentially free, and the software/services you buy are where the money is generated.
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That is the 'new' economy.. Forget the days of high profit items for most industries that
are technology related.
This is a byproduct of more efficient manufacturing, and in many cases, *fair* competition..
( something that we don't currently have in this country , but that is a different subject )
Don't expect this trend to change any anytime soon either...
Too bad it also means fewer jobs to make the money to buy the cheap items... Since it takes fewer people to make the same # of items it did 10 years ago.
---- Booth was a patriot ----
You play to the strengths of the manufacturing of each country, take out the middleman, and we no longer have to pay inflated costs for everything.
Kind of wierd to think that it's cheaper to get something made and shipped halfway around the world than it is next door, but if it makes a dollar go farther in this economy I'm all for it.
Fair is defined as a level playing field. If we are playing a game of soccer, and your team cheats, the match was not fair. If no one cheats, it is a fair match. It is not required that our teams like each other: it's quite possible to play a fair match against someone you absolutely despise.
Fair competition is the same. If a government is heavily subsidizing a company, that's not fair competition. If a group of companies is colluding to drive a competitor out of business, that's not fair competition. If lots of people are making the same thing, thereby driving down prices, that's fair competition.
What you seem to be looking for is no competition, wherein either a government or cartel sets prices, rather than the market. That has nothing to do with fair competition, and is really about the exact opposite.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
At least close to perfect competition since in perfect competition, the profitsare zero. I don't really see how this is a problem.
Once you figure in shipping costs, customs & foreign legal costs, time delay, and sometimes translation problems sometimes changing how you operate in the USA can actually be cheaper.
I remember reading how MPC computers (formerly Micron) was considering outsourcing like dell and gateway have done. They took a different approach, and are doing much better. They have found that they can compete while staying in the USA and not outsourcing anything. Of course, the fact that they're not in a high-rent area of the USA probably helps. The cost of living in areas like California and NYC really skews the numbers.
I don't read AC A human right
``You wonder if other business, like low-end PCs hardware, are in similar trouble.''
Yes, they are. This is why they try to squeeze every cent out of everything, leaving us with motherboards with leaking capacitors, harddrives with 1 year MTBF, memory errors, etc. Those of us who run cheap PC hardware, anyway.
Please correct me if I got my facts wrong.
Really, profit isn't the point.
The first objective is to create jobs. Especially in a socialist/communist country, it doesn't really matter whether the company makes big profits, it matters that they provide good jobs to the people. So, if the company pays the workers $2 per DVD player more than a US-owned company in China would, and makes a $1 profit per DVD player, then a US-owned company in China making the same DVD player would make three times the profit.
The second point is to build up specialization. Making DVD players takes much more skill and training than making bamboo furniture for export. This encourages Chinese kids to stay in school longer because better jobs are available, which increases the net national education, which leads to more innovation and development.
The third, and most important point, is to take over the world. Take a look at the Chinese currency. China's been making more and more stuff for export, and the US has been importing more and more from China. So, you would expect the Chinese RenMinBi to have increased in value compared to the US dollar over the last decade -- but it didn't, really.
The reason that the RenMinBi has not dramatically increased in value compared to the US dollar is that China has been systematically buying (investing in) US companies with their new US dollars just as fast as those US dollars are coming in from the US. This is called a "balance of trade deficit" for the US. It's not sustainable for China to keep doing this, but very soon the communists will OWN capitalism.
Forget this cold war shit, the best way to beat the capitalist pigs is to play by their rules (internationally), buy them out, and it's working.