Chinese Made Gutars?

[48thStreetCustom]

[Invalid or Expired Link Removed]you go. It's easier to deal with the overhead as an aggregate figure.

Can you explain this to me?

"The new corporate tax law, which took effect January 1, 1994, cut the corporate tax rate from 55 to 33 percent ... In contrast, the corporate income tax in the U.S. is graduated, with four brackets ranging from 15 to 25 to 34 to 35 percent"

Assuming Apple and Fender are in the highest tax brackets, the difference is 2% less tax in China? Am I comparing apples to oranges? Are there other factors I'm leaving out?

 

[okcrum]

Can you explain this to me?

"The new corporate tax law, which took effect January 1, 1994, cut the corporate tax rate from 55 to 33 percent ... In contrast, the corporate income tax in the U.S. is graduated, with four brackets ranging from 15 to 25 to 34 to 35 percent"

Assuming Apple and Fender are in the highest tax brackets, the difference is 2% less tax in China? Am I comparing apples to oranges? Are there other factors I'm leaving out?

I presume so. IANAL though.

What seems to matter is US factory production quote per unit vs. China factory production quote per unit. Those (and my experience mirrors closely what I've been told) run about 4:1 per unit cost difference. That ratio builds in all costs usually including shipping.

Profit margins are generally (at least initially) set as a some multiple of manufacturing cost - 6:1 and higher are not uncommon in the consumer electronics business. This is marketing, sales, stocking, and shipping overhead, as well as another layer of taxes. Plus the eventual profit.

That's why the $200 counterfeit that cost $50 to build is essentially the equivalent of an $800 Fender that cost $200 to build, or a $1600 MIA that cost $400, etc. as far as marketing and management see it.

 

[Spirit of Ox]

I can't say enough good things about the Chinese Fender Modern
Player line. I own the Jaguar bass and it's absolutely fantastic in every way. The neck is near flawless with one tiny high spot on the 13th fret, everything else perfect. The pickups are pretty decent too. If you want a cheap bass, these are the way to go.

 

[48thStreetCustom]

I presume so. IANAL though.

What seems to matter is US factory production quote per unit vs. China factory production quote per unit. Those (and my experience mirrors closely what I've been told) run about 4:1 per unit cost difference. That ratio builds in all costs usually including shipping.

Profit margins are generally (at least initially) set as a some multiple of manufacturing cost - 6:1 and higher are not uncommon in the consumer electronics business. This is marketing, sales, stocking, and shipping overhead, as well as another layer of taxes.

That's why the $200 counterfeit that cost $50 to build is essentially the equivalent of an $800 Fender that cost $200 to build, or a $1600 MIA that cost $400, etc. as far as marketing and management see it.

I'm not saying that you're wrong. But this is what I don't understand. According to Forbes, the production quote per unit is only $4 higher if Apple makes the iPhone in the US. And according the link you provided, the tax difference between the US and China is 2%. So why are US manufactured goods so much more expensive? Does the extra consumer costs go to corporate profits? Does it just go into the pockets of the fat cats? Is the "Made in America" stamp just a way to increase profits because the value is perceived to be higher?

 

[P bass guy]

Stating the obvious here, but there are two different conversations going on in this thread.

Chinese / over seas manufacture by legitamte companies that choose move manufacturing overseas to cut costs.

Counterfit / knock off products being illegally produced and sold in the US.

One of those things is just fine by me and one is not.

 

[P bass guy]

Duuuuude - I'm starting to get a little lost in this thread, but even if the taxes aren't that different, I think they save the money on the workers wages more than anything. Our economy is so inflated that nobody can live on five dollars an hour, but in China the equivalent of five USD per hour might be a good living wage. When China's economy advances and inflates, their cost of living goes up and the differences is less significant and manufacturing will shift back to the US.

 

[48thStreetCustom]

Duuuuude - I'm starting to get a little lost in this thread, but even if the taxes aren't that different, I think they save the money on the workers wages more than anything. Our economy is so inflated that nobody can live on five dollars an hour, but in China the equivalent of five USD per hour might be a good living wage. When China's economy advances and inflates, their cost of living goes up and the differences is less significant and manufacturing will shift back to the US.

Yeah, sorry. I didn't mean to muddy the waters by shifting the conversation. I was going off the "buy American" theme that popped up a couple pages back. I'm just trying to get clarity of why the prices are different. I though that topic was worthy of discussion. I was hoping to get quantitative info rather than generalizations. But in fairness my "the money goes to the fat cats" is just as much a generalization so I'm just as guilty as the next guy.

 

[P bass guy]

Regarding LEGITIMATE products that happen to be produced in China (or any place overseas)

It's a global economy. Like it or hate, you can't change it. It's been going this direction a very long time. Don't forget, Christopher Columbus was looking for a better trade route to China when he accidentally found America. International trade has been increasing for a very long time.

In our capitalist society, people vote for products with their dollar. Americans love to say that they want US made products, but in reality, when they go to the store to vote with their dollar they seem to really want the best possible product at the lowest possible price. In the current global economy that's often a high quality product manufactured in China.

Bottom line, it's a global economy and no amount of 'union yes' and 'buy american' chest thumping is going to put that genie back in the bottle.

 

[okcrum]

I'm not saying that you're wrong. But this is what I don't understand. According to Forbes, the production quote per unit is only $4 higher if Apple makes the iPhone in the US. And according the link you provided, the tax difference between the US and China is 2%. So why are US manufactured goods so much more expensive? Does the extra consumer costs go to corporate profits? Does it just go into the pockets of the fat cats? Is the "Made in America" stamp just a way to increase profits because the value is perceived to be higher?

There are three other factors in the overhead. Overhead is not taxes only, it adds to the aggregate. I think you understand that.

 

[okcrum]

Regarding LEGITIMATE products that happen to be produced in China (or any place overseas)

It's a global economy. Like it or hate, you can't change it. It's been going this direction a very long time. Don't forget, Christopher Columbus was looking for a better trade route to China when he accidentally found America. International trade has been increasing for a very long time.

In our capitalist society, people vote for products with their dollar. Americans love to say that they want US made products, but in reality, when they go to the store to vote with their dollar they seem to really want the best possible product at the lowest possible price. In the current global economy that's often a high quality product manufactured in China.

Bottom line, it's a global economy and no amount of 'union yes' and 'buy american' chest thumping is going to put that genie back in the bottle.

No, not buying goods you know are hot, in the stolen sense, might. That would require a sense of something considered archaic, like ethics. I figure if you buy a Chinese counterfeit, you'd buy a hot bass off the street. Same thing, when you look at it a certain way.

 

[48thStreetCustom]

There are three other factors in the overhead. Overhead is not taxes only, it adds to the aggregate. I think you understand that.

But what are the cost (percentage or otherwise) of those other factors? It seems to me that manufacturing in the US might save money when it comes to shipping and import tariffs. I'm not trying to be a contrarian here. I'm just trying to understand it on a better level than "it cost more to make it in the US." I want to find out where the money goes.

 

[P bass guy]

Okcrum - I agree completely. I would never buy a counterfeit or illegal product nor would I buy stolen merchandise. I tried to identify my post as being in regards to legitimate products produced overseas. (IE Fender modern player line etc).

As I said few posts back, there are two different conversations happening in this thread.

Knockoff and counterfeits are unacceptable.

Products that used to be made in the US and are now made overseas are unavoidable and not categorically bad.

IMO

 

[davy4575]

(Fica, medicare, medicaid, social sec. unenjoyment, medical insurance + base pay, union fees and dues, retirement) + (real estate, taxes/fees, environmental taxes and fees, utilities, accounting and bookkeeping, legal dept for human resource violations, government compliance, royalty fees) + (insurance and liability reduction: general liability, business auto insurance, workers compensation, sexual harassment protection, general umbrella policy, racial discrimination writer, wrongful death coverage, and completed products writers) = some of your overhead to manufacture and produce here....And this is before you get your ass raked over the coals by the IRS. Its vastly more expensive to produce on US soil than PRC

 

[SanDiegoHarry]

(Fica, medicare, medicaid, social sec. unenjoyment, medical insurance + base pay, union fees and dues, retirement) + (real estate, taxes/fees, environmental taxes and fees, utilities, accounting and bookkeeping, legal dept for human resource violations, government compliance, royalty fees) + (insurance and liability reduction: general liability, business auto insurance, workers compensation, sexual harassment protection, general umbrella policy, racial discrimination writer, wrongful death coverage, and completed products writers) = some of your overhead to manufacture and produce here....And this is before you get your ass raked over the coals by the IRS. Its vastly more expensive to produce on US soil than PRC

Not to mention zero labor and environmental protections in China - but that's not fashionable to mention, right?

 

[buldog5151bass]

Even China is starting to outsource, as they are starting to pay something closer to a living wage.

Speaking of that, amazing that people who complain about this country not paying a "living wage" have no qualms about buying from places where people can only dream of the benefits and pay US workers get.

 

[davy4575]

Not to mention zero labor and environmental protections in China - but that's not fashionable to mention, right?

It would be too long of a list, but that too. The US is held to a higher standard in regards to workers rights and environmental among others.

 

[eldoryder]

I hate to add to the burden, but ANY conversation that starts heading in the direction of Economics here usually ends up with a political flavor. Having said that....

....can we PLEASE retire the "Union costs" from the conversation? Less than 9% of ALL workers in the USA currently are represented by a union. And only a percentage of that is manufacturing. That's less than 1 in 10. If anyone truly believes that manufacturers are currently fleeing the USA because of unions, they're misinformed. The correct answer to why is usually "maximizing profits". As mentioned earlier, there's no putting THAT genie back in the bottle.

A BMW plant located in the American South just had a vote on whether or not to have union representation. Being a German company that is used to trade unions, BMW had no problem with that. The Governor and both Senators of that state, however, put extreme pressure on the region where this plant was located, threatening all kinds of repercussions if the vote went the union's way. Care to guess the outcome or the political affiliation of the elected officials?

I didn't think so. Unions are barely on life support in this country. They are no longer useful as bogeymen or whipping boys.

 

[davy4575]

not to go down the political rabbit hole either, but theyre still alive and well in manufacturing, auto, commercial construction, grocers, teachers, etc. They have tremendous influence in policy and financial direction as well as indirect costs where they have set the bar for non union labor costs. not making a statement either way, just stating that the union influence past and present is very pronounced and has wide reaching costs.

 

[48thStreetCustom]

(Fica, medicare, medicaid, social sec. unenjoyment, medical insurance + base pay, union fees and dues, retirement) + (real estate, taxes/fees, environmental taxes and fees, utilities, accounting and bookkeeping, legal dept for human resource violations, government compliance, royalty fees) + (insurance and liability reduction: general liability, business auto insurance, workers compensation, sexual harassment protection, general umbrella policy, racial discrimination writer, wrongful death coverage, and completed products writers) = some of your overhead to manufacture and produce here....And this is before you get your ass raked over the coals by the IRS. Its vastly more expensive to produce on US soil than PRC

Thanks. Those are all good points.

 

[Smooth_bass88]

A curious thing I recently was told about by another member.
Does anyone know what the deal is with these Chinese made guitars, some I see are what look to be knock-offs of American brand name guitars?
I see they are sold through outlets like Allibaba.com.

Here is your answer:

http://newyork.cbslocal.com/2014/04...ake-guitars-found-at-jersey-city-mail-center/