Quotulatiousness

December 18, 2010

The fascinating economics of Chinese manufacturing

Filed under: China, Economics, Tools, Woodworking — Tags: , — Nicholas @ 11:17

An interesting post at the Bridge City Tools blog about how Americans (and Canadians) are actually willing to pay the outrageous price of $5 for a single 1/8″ drill bit:

About 10 years ago I was in an OEM Chinese factory that made bench grinders. You have seen them, 1/2 HP motor, two 6” grinding wheels, pig tail cord, a small plastic face shield and no nameplate — these would be attached by the American companies that bought them. The total cost per grinder, landed in the US was $7.15. Of course at this price it would be asking too much for a UL tag.

These grinders were, and still are being sold here and the prices range from $49 to $200 — awesome margins by any standard.

Behind the factory floor there was a small mountain of insulated wire that had been pulled from old cars, appliances, televisions and the like and it was replenished daily. Surrounding the wire mountain were a couple of dozen women who were stripping the wire of insulation. These wire remnants were then spliced together and used in the grinder motor windings. Completely illegal, and dangerous. But cheap.

I thought I was shocked until I walked into the factory section that made twist drill bits. Here they were making, for the AMERICAN MARKET, those 59, 89, 119 pc drill sets found at the box stores and other discount joints for $19.95. Again, there were rows of women who were dipping the bits in what looked like Easter egg dye.

I asked the interpreter what they were doing. He replied, “They are making all the bits the same color as these four.” The four bits he pointed out were the 1/8”, 1/4”, 3/8” and the 1/2”.

I asked why.

I learned that those four bits were properly hardened. The remaining 115 bits were made with what I call pot metal. The reason?

“Because those are the only four hole sizes that Americans use.”

I asked, as politely as I could, if there was any guilt or remorse for duping their American customers. The reply was shocking.

“In America, if it cost less than $20, nobody complains about quality — everybody in China knows this.”

It’s an interesting explanation . . . and has the ring of truth to it: I’ve got several sets of drill bits, most of them bought from a reputable source (Lee Valley Tools), but I have one “big” set bought from a big box store (I think it’s branded as DeWalt, but probably made in China).

Most of the sizes of drill I use in woodworking are from the Lee Valley sets, but I think I’ve only used the 1/16″ and 1/8″ bits from the big box set. I wonder what’d happen if I tested all the rest of that set?

I have to admit being guilty of this:

More recently, I found myself at the local paint shop to purchase a Purdy paint brush — I have always liked them. So when I walked into the store I asked the sales rep to show me the most expensive brushes…

“I don’t get asked that very often…” he replied.

I then learned that the cheapest brushes outsell the flagged end bristle brushes by about 20 to one. The reason?

So people can throw them away rather than clean them.

In my defence, I can say that I get several uses from each of the “disposable” brushes because I do clean them after each use, but I do eventually throw them away. Once the quality of the applied stain or finish starts getting worse, it’s time to get rid of the brush.

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