China's manufacturing of shoes, clothing, etc.

Most of China’s reform and opening-up policies are staged products, and there are very complex political, economic and diplomatic factors behind them. Now that our country is in the period of adjustment of the system reform, the state must re-revise the foreign trade export policy, comprehensively examine the market competition environment in China, and establish a good platform for fair competition among the Chinese tourists. The outbound consumption of Chinese tourists is increasing, and the government is constantly looking for solutions to expand domestic demand. At the time, the consumption of foreigners in foreign countries is so hot. What is the reason for this? Why does "Made in China" be cheaper than China? This is a question that many people who go abroad often cannot understand.

The economic model only cares about production regardless of consumption?

The “Los Angeles Times” website reported that Chinese-made products are often more expensive in China than in the West. The notebooks bought from the Apple flagship store in Beijing are no different from those sold in the United States. The only difference is the price, which is 460 US dollars more expensive than in the United States. A pair of Nike sneakers bearing Chinese labels is priced at US$165 in the United States and US$190 at a Nike store in China. The Sony flat-panel TVs assembled by Chinese workers sell for about $800 at Best Buy stores in the United States, but at a well-known electronics chain in China, you have to pay 30% to buy them.

This is a strange thing in China's world factory. China is famous for producing cheap products for Western consumers, but it is not always the case for its own people. Although China's consumer spending has been growing as China's prosperity has grown, China's economic model is basically only for production considerations and not for domestic consumption.

Related-party transactions lead to special "price differences"

Qiao Xinsheng wrote in the Shanghai Commercial Daily that Chinese-made goods are cheaper to sell abroad than they are in the country, mainly because of the following reasons: First, related-party transactions have caused special "price differences" for Chinese goods. As we all know, China's foreign trade and export enterprises are a very special group. 30% of foreign trade export enterprises are processing enterprises and 40% of foreign trade export enterprises are concentrated in the coastal areas. These enterprises implement the “two-headed” trade policy—the vast majority of raw materials come from abroad; most of the products are exported overseas. This special foreign trade pattern has determined that many products produced by foreign trade and export enterprises cannot enter the domestic market at all. Of course, foreign export companies do not want to earn high profits in overseas markets, but in order to circumvent China’s tariffs, these foreign trade export companies desperately drive down prices when they sign export contracts. If the products produced by these companies are sold in China, The affiliates of foreign trade exporting companies cannot obtain sufficient affiliate trading profits from them, so they have to increase the price of their products. This is the fundamental reason why foreign trade companies' export commodity prices are cheaper than in China.

Transaction costs in the Chinese market are huge

Second, the Chinese market is a segmented market. The entry of products into the domestic market requires huge transaction costs. For example, if a company's products enter domestic supermarkets, it will not only need to pay for entry fees, but also to pay various guarantees. At present, most of the supermarkets in large cities in China belong to Sino-foreign joint ventures or foreign-invested enterprises. They restrict the sales of some enterprises' products by setting trade thresholds. In order for companies to enter their sales channels, they must pay 15% to 20% of their sales revenue, which is an unbearable burden for those companies that are just starting out. Not only that, some local governments also artificially set some trade thresholds in order to support local enterprises and prohibit foreign companies from entering local sales. In order to expand product sales channels, many companies have to make a fuss about sales methods and transaction costs, and pay discounts and commissions directly or indirectly to ensure that companies can form sales outlets in China. In recent years, China has strengthened the supervision of the retail market and prohibited some large retail companies from collecting entry fees. As a result, some comprehensive large-scale retail enterprises took the sales counters or production companies to bring their own marketing staff to transfer the sales burden to the production companies. Under such a trade pattern, some manufacturers have to abandon the domestic market and instead seek export channels. Although the sales of enterprise products abroad increase transportation costs, they can significantly reduce transaction costs. Therefore, the prices of products produced by these companies in foreign countries are cheaper than in China.

The financial cost of domestic trade is high

Third, the financial environment is also an important reason that causes China to make foreign prices cheaper than domestic ones. Trade can generally be divided into two links: cargo transportation and fund settlement. Due to the lack of a good credit environment in China, there are many phenomena that cannot be settled or repaid on schedule, and engaging in trade within China faces enormous credit risks. In order to reduce their own risk, banks often make their own calculations in terms of fund settlement. This has led to many of the payments that should have been made due to financial companies. While there are also significant credit risks in engaging in international trade, as countries generally observe trade agreements and business practices, financial risks are lower than domestic trade. Judging from the industrial chain, foreign trade companies mostly play the role of processors and there is almost no credit risk in the export trade. In other words, export orders originate from foreign countries, raw materials processed from abroad, funds settled mainly used to purchase raw materials, and transaction costs in the financial sector are relatively small. Many export trades are actually transactions between some overseas family-owned companies, so there is no question of settlement risk at all. Because the financial risk of export trade is relatively small, and the financial cost of domestic trade is relatively high, it is objectively caused that the price of foreign trade export products sold abroad is cheaper than in China.

Unique tax systems and monopolies raise prices

Fourth, China's unique tax system is also a reason. China has not only promulgated the “Funded-funded Enterprises” Act, but also formulated a number of tax incentives for “three foreign-funded enterprises”. Many "funded enterprises" engage in foreign trade export operations. They enjoy preferential treatment in China, on the one hand, and evade state taxes through connected transactions on the other. Mainland enterprises can neither enjoy the preferential treatment of “three foreign-funded enterprises” nor can they evade national taxes through connected transactions. The prices of products produced by mainland enterprises in China are naturally higher than those of “three-funded enterprises” sold outside China. The price is much higher. This is an unfair competition and is a special type of trade discrimination. In addition, due to the monopoly of state-owned enterprises in China, the domestic prices of some products or services are much higher than the overseas prices.

Analyzing this phenomenon is somewhat helpless. Most of China’s reform and opening-up policies are staged products, and there are very complex political, economic and diplomatic factors behind them. Now that our country is in the period of adjustment of the system reform, the state must re-revise the foreign trade export policy, comprehensively examine the market competition environment in China, and establish a good legal platform for the fair competition of enterprises. Otherwise, Chinese products will face more and more anti-dumping and anti-subsidy accusations in foreign markets. The Chinese government's macro-control policies to stimulate domestic market demand are also difficult to implement.