Wal-Mart's China inventory to hit US$18b this year
- Thread starter ylexot
- Start date
Larry Gude
Strung Out
Why...
...very sad?
...very sad?
Tonio
Asperger's Poster Child
Larry, maybe this comes from my lack of knowledge about international economics--it just feels unsettling to have Americans buying so many foreign-made products. I know realistically that in an international economy, countries specialize in certain products and services. But when I do buy something made in a foreign country, I have a momentary twinge of guilt, like I'm helping to contribute to the loss of American jobs. I really need to learn more about how the international economy works.Larry Gude said:
And it's not just that we're buying things from foreign countries, but that we're buying a huge amount of stuff from China. I'd rather help support a democracy instead of a communist regime. Thus, it is sad to me.
Larry Gude
Strung Out
Look at it this way...
...it is a sign of US economic success.
I understand the nationalistic impulse to want to 'buy American' but there are very few areas where this is realistic anymore. We are now a service economy because it's cheaper to import just about everything.
As you both know the mass of consumers look for value which is the intersection between what they determine to be the best compromise between quality and price and China does a hell of a job of making a decent girls dress for $10.
Now, I don't know the economics of dress making but I can figure that, at present, it's cheaper to make one in China, put it on a boat and ship it here and then distribute it to retail than it is to make it here at home. I'm with you if you think that sounds rediculous.
But we are talking trade deficit here, not total trade, so if the Wal Mart deficit with China is $18 bil and there are basically 180 million American bread winners then that's about $100 per bread winner, or household, that goes to China instead of a US manufacturer.
Can a US company and Wal Mart make it if the dress costs $20, or double what the China route costs?
Would you pay $20 for a US dress of similar quality to the China one, side by side?
That would mean your $100 to China is now $200 to the US economy.
If the total deficit with China is $180 bil then we're talking $1,000 and $2,000 per.
But what of the effect with the rest of our trade with China? Trade war? Would a US person making whatever it is we sell them lose his job and the net effect become far worse than a $180 bil deficit?
What is the value of them growing a middle class over time, just as we did?
What is the cost in US jobs lost in no longer handling the imports?
Ideally, over time, our trade deficits with the world mean that the world is growing a middle class. That means population control because middle classes have no need or desire to have so many kids. That means increased concern for the environment as a middle class has the time to start to care about a great many things besides survival.
This discusion could grow ever more fascinating.
What if, in a fit of patriotism, Wal Mart decided to start buying American only, damn the cost?
They are large enough that people simply would have nowhere else to go and would have to pay the higher prices at least in the short term.
Now, certainly this could not be done overnight because China is set up to produce and we're not and there are long term contracts etc, but in time for next year, it is theoretically possible.
What if some ugly incident occured, say an invasion of Taiwan, and Americans refused, en masse, to buy Chinese? This is a powerful motivation for China to be a good world citizen.
In any event, I'd suggest that in and of itself the deficit is meaningless if it's working for everybody.
Thus, the 'ifs'.
Competition makes everybody better. What is that worth?
...it is a sign of US economic success.
I understand the nationalistic impulse to want to 'buy American' but there are very few areas where this is realistic anymore. We are now a service economy because it's cheaper to import just about everything.
As you both know the mass of consumers look for value which is the intersection between what they determine to be the best compromise between quality and price and China does a hell of a job of making a decent girls dress for $10.
Now, I don't know the economics of dress making but I can figure that, at present, it's cheaper to make one in China, put it on a boat and ship it here and then distribute it to retail than it is to make it here at home. I'm with you if you think that sounds rediculous.
But we are talking trade deficit here, not total trade, so if the Wal Mart deficit with China is $18 bil and there are basically 180 million American bread winners then that's about $100 per bread winner, or household, that goes to China instead of a US manufacturer.
Can a US company and Wal Mart make it if the dress costs $20, or double what the China route costs?
Would you pay $20 for a US dress of similar quality to the China one, side by side?
That would mean your $100 to China is now $200 to the US economy.
If the total deficit with China is $180 bil then we're talking $1,000 and $2,000 per.
But what of the effect with the rest of our trade with China? Trade war? Would a US person making whatever it is we sell them lose his job and the net effect become far worse than a $180 bil deficit?
What is the value of them growing a middle class over time, just as we did?
What is the cost in US jobs lost in no longer handling the imports?
Ideally, over time, our trade deficits with the world mean that the world is growing a middle class. That means population control because middle classes have no need or desire to have so many kids. That means increased concern for the environment as a middle class has the time to start to care about a great many things besides survival.
This discusion could grow ever more fascinating.
What if, in a fit of patriotism, Wal Mart decided to start buying American only, damn the cost?
They are large enough that people simply would have nowhere else to go and would have to pay the higher prices at least in the short term.
Now, certainly this could not be done overnight because China is set up to produce and we're not and there are long term contracts etc, but in time for next year, it is theoretically possible.
What if some ugly incident occured, say an invasion of Taiwan, and Americans refused, en masse, to buy Chinese? This is a powerful motivation for China to be a good world citizen.
In any event, I'd suggest that in and of itself the deficit is meaningless if it's working for everybody.
Thus, the 'ifs'.
Competition makes everybody better. What is that worth?
Tonio
Asperger's Poster Child
Thanks, Larry. I wasn't defending the idea of "buying American" on purely patriotic terms, because, as you said, it doesn't make economic sense. My question is, how do you explain to an average person like myself why buying foreign-made products doesn't put American workers out of work?Larry Gude said:
Larry Gude
Strung Out
I don't see anything wrong...
...with buying from ones home country simply on patriotic grounds.
I'm an average Shmoe to and I can't tell you it doesn't put people out of work per se. It does.
BUT
Did someone lose a crap $7 an hour textile job and get there kids to go on and become a John Edwards or even a decent rich person?
It's not simple but just don't look at it as zero sum because it's not. Cause and effect.
...with buying from ones home country simply on patriotic grounds.
I'm an average Shmoe to and I can't tell you it doesn't put people out of work per se. It does.
BUT
Did someone lose a crap $7 an hour textile job and get there kids to go on and become a John Edwards or even a decent rich person?
It's not simple but just don't look at it as zero sum because it's not. Cause and effect.
ylexot
Super Genius
Here's another related article. It seems the EU is having a big trade deficit with China as well.
EU spells out trade threat from China
EU spells out trade threat from China
Triggerfish
New Member
The situation is bad for the Chinese people too. Walmart demands that its suppliers charge the absolute minimum, which causes the companies to slash things that are not "important," such as safety equipment. Although Walmart inspects its suppliers but these companies subcontract a large portion of the orders. The subcontractors are not inspected so they don't provide their workers with things like respirators and gloves.
Larry Gude
Strung Out
trigger...
...that's part of the equation as well because we KNOW what is bad and what is not but we had our Robber baron era as well where worker conditions were horrific.
The simple fact is that for the Chinese, working without a respirator or gloves or an eyewash station or regular breaks or any number of safety precautions may well be the difference between feeding ones family or not.
Hopefully, and I don't know to what extent, we, as a customer, are placing reasonable demands on the Chinese and they are meeting them and, over time, will come to view worker safety as a necessity, a we do.
There's no nice way to say it but when labor is in abundance it will be exploited more so than where it is not in abundance.
...that's part of the equation as well because we KNOW what is bad and what is not but we had our Robber baron era as well where worker conditions were horrific.
The simple fact is that for the Chinese, working without a respirator or gloves or an eyewash station or regular breaks or any number of safety precautions may well be the difference between feeding ones family or not.
Hopefully, and I don't know to what extent, we, as a customer, are placing reasonable demands on the Chinese and they are meeting them and, over time, will come to view worker safety as a necessity, a we do.
There's no nice way to say it but when labor is in abundance it will be exploited more so than where it is not in abundance.
Larry Gude
Strung Out
Wonder if I can quote a quote of a quote?
Originally Posted by Larry Gude
...it is a sign of US economic success.
It is also a sign of what a behemoth Wal-Mart Inc. has become.
Yes
I understand the nationalistic impulse to want to 'buy American' but there are very few areas where this is realistic anymore. We are now a service economy because it's cheaper to import just about everything.
So Americans must accept that fact that coorporate America now concentrates on exporting "Services" and Techology, and not widgets?
No, not accept per se. I grow flowers for a living which, by and large, is something I have an advantage over China or, for our market, even California. Can't compete on dresses? Compete where you can win.
But we are talking trade deficit here, not total trade, so if the Wal Mart deficit with China is $18 bil and there are basically 180 million American bread winners then that's about $100 per bread winner, or household, that goes to China instead of a US manufacturer.
The article states that Wal-Mart expects to end-up with $18 billion worth of inventory from its China operations, at 20% growth. I do not understand your statement "if the Wal-Mart deficit with China is 18 billion..." Wal-Mart is making huge profits from its China operations, not in a deficit with them. I think companies would be very pleased with 20 % growth. Now how much of the Wal-Mart profit that makes it back into the states is out-of-my realm.
The deficit is US trade with China and Wal Marts 'share' is 18 billion they are spending with China that they are not spending with a US manufacturer(s). That gross dollar amount is 20% higher than last year meaning that much more, the 20%, was spent with US suppliers the year before and is now...not. It's a gross dollar, a cost of goods sold, not a profit or return on investment dollar.
The trade deficit with China has its roots in the fact that China is a tight-azz when it comes to allowing US imports into the country. The US door that swings open wide open for imports China, is only cracked in China for US imports.
Then we need our government to act in a fashion to make the strteet two way. BUt I can guarantee you we ain't gonna be able to sell them wha tthe yare selling Wal Mart. It has to be something we are better at; food, tech, etc.
Ideally, over time, our trade deficits with the world mean that the world is growing a middle class. That means population control because middle classes have no need or desire to have so many kids. That means increased concern for the environment as a middle class has the time to start to care about a great many things besides survival.
Yes you are correct with our trade deficits, and outsourcing we are growing other countries economies, and in turn the average wealth of the masses. But of course at an expense to workers here at home.
Conversely, if we limit this trade then we are costing ourselves more for goods than what the world market demands. Balancing act, yes?
This discusion could grow ever more fascinating.
What if, in a fit of patriotism, Wal Mart decided to start buying American only, damn the cost? Not in our lifetime!
They are large enough that people simply would have nowhere else to go and would have to pay the higher prices at least in the short term.
So the US workforce and its labor rates have essentially priced themselves out of business.
Not on purpose. It's more China has priced them out. You can't get a US worker to take $1 an hour. You can't put up a factory for less than it costs (much more than in China I am suppossing) and you can't get US consumers to pay twice as much for the same thing.
Competition makes everybody better. What is that worth?
Originally Posted by Larry Gude
...it is a sign of US economic success.
It is also a sign of what a behemoth Wal-Mart Inc. has become.
Yes
I understand the nationalistic impulse to want to 'buy American' but there are very few areas where this is realistic anymore. We are now a service economy because it's cheaper to import just about everything.
So Americans must accept that fact that coorporate America now concentrates on exporting "Services" and Techology, and not widgets?
No, not accept per se. I grow flowers for a living which, by and large, is something I have an advantage over China or, for our market, even California. Can't compete on dresses? Compete where you can win.
But we are talking trade deficit here, not total trade, so if the Wal Mart deficit with China is $18 bil and there are basically 180 million American bread winners then that's about $100 per bread winner, or household, that goes to China instead of a US manufacturer.
The article states that Wal-Mart expects to end-up with $18 billion worth of inventory from its China operations, at 20% growth. I do not understand your statement "if the Wal-Mart deficit with China is 18 billion..." Wal-Mart is making huge profits from its China operations, not in a deficit with them. I think companies would be very pleased with 20 % growth. Now how much of the Wal-Mart profit that makes it back into the states is out-of-my realm.
The deficit is US trade with China and Wal Marts 'share' is 18 billion they are spending with China that they are not spending with a US manufacturer(s). That gross dollar amount is 20% higher than last year meaning that much more, the 20%, was spent with US suppliers the year before and is now...not. It's a gross dollar, a cost of goods sold, not a profit or return on investment dollar.
The trade deficit with China has its roots in the fact that China is a tight-azz when it comes to allowing US imports into the country. The US door that swings open wide open for imports China, is only cracked in China for US imports.
Then we need our government to act in a fashion to make the strteet two way. BUt I can guarantee you we ain't gonna be able to sell them wha tthe yare selling Wal Mart. It has to be something we are better at; food, tech, etc.
Ideally, over time, our trade deficits with the world mean that the world is growing a middle class. That means population control because middle classes have no need or desire to have so many kids. That means increased concern for the environment as a middle class has the time to start to care about a great many things besides survival.
Yes you are correct with our trade deficits, and outsourcing we are growing other countries economies, and in turn the average wealth of the masses. But of course at an expense to workers here at home.
Conversely, if we limit this trade then we are costing ourselves more for goods than what the world market demands. Balancing act, yes?
This discusion could grow ever more fascinating.
What if, in a fit of patriotism, Wal Mart decided to start buying American only, damn the cost? Not in our lifetime!
They are large enough that people simply would have nowhere else to go and would have to pay the higher prices at least in the short term.
So the US workforce and its labor rates have essentially priced themselves out of business.
Not on purpose. It's more China has priced them out. You can't get a US worker to take $1 an hour. You can't put up a factory for less than it costs (much more than in China I am suppossing) and you can't get US consumers to pay twice as much for the same thing.
Competition makes everybody better. What is that worth?