How could China produce various article in a very cheap rate
Answers
t might not be what you think it is. Most people would say it’s no secret and that the answer is obvious – lower wages in China compared to the United States. However, that answer is only partially true. Why? Because labor is only one part of the total cost of a product, and in many cases it’s as low as 20% of the total cost.
Let’s compare two simple products that are primarily made in China: a stuffed toy animal for a baby and a Frisbee. The stuffed animal is comprised of textile material for the cover, stuffing, two eyes and a nose. The material must be cut into pieces, sewn together, and stuffed. The nose, eyes, and mouth are usually a pattern of thread that is sewn on the face piece before the toy animal is sewn together and stuffed. The cutting of the pieces may be done by hand or by machine, but the pieces are sewn together by a worker using a high speed sewing machine. The stuffing is usually blown into the stuffed toy by a machine, but the insertion point is closed by hand. This type of a product is considered to be a high labor content product with labor being about 70% of the total cost.