I wonder how much dirt cheap labor plays into the affordability of Chinese cars. Is this simply Korea 2.0, where we have a nation on the absolute verge of being a leading nation (economically speaking), but their standard of living hasn't caught up yet, but soon will?
China has a social contract that they've been suffering in poverty for years, rather than experiencing immediate economic benefits, to boost their nation. It's one of the reasons they're so anti-immigration at the moment: they're on the verge of being rewarded for their suffering, at least as far as the general populace is concerned. Obviously how that plays out in reality will be a different question.
Anyways, once these cars start being made by someone who makes a salary that doesn't look like a joke to someone from a modern nation, I imagine their prices will rocket up to match other manufacturers.
I still don't get why people are so shocked that Chinese products are cheap. It has been this way for decades at least.
The issue itself is actually not complicated. Most media simply do not want to acknowledge the positive part about China, so they over-emphasize the advantage of low labor costs. Putting aside those clichés, China has the most complete set of industrial sectors, the fastest-growing density of industrial robots, and a large number of skilled workers. Every part of the industrial supply chain and raw materials can be supplied domestically, allowing prices to be pushed very low. These factors may already contribute more than cheap labor. Keep in mind that most Southeast Asian countries have cheaper labor than China, yet they cannot manufacture cars cheaper than China.
Take BYD as an example. Its wages are much lower than Tesla’s, but BYD has nearly one million employees, most of whom are in China, and many of its factories are in non-major cities. The wage levels in those places are certainly higher than in Vietnam, and BYD’s wages are higher than the local average. Thanks to China’s advantage in cost of living, a BYD employee earning 5,000 RMB (>700USD) a month can actually live quite well in a non-first-tier city. Rent is below 1,000 RMB, and cooking at home usually costs only a few hundred RMB. They already belong to the local middle class and generally do not face much financial pressure.
But China do have significantly lower labour costs internationally. Part of that has been due to keeping their currency artificially low by sinking money in US bonds (which also inflates the US dollar). They also have plenty of specialised workers in manufacturing after they out-priced and out-classed every other country. Setting up an advanced manufacturing facility in China is far cheaper than basically anywhere else on the planet.
China has a social contract that they've been suffering in poverty for years, rather than experiencing immediate economic benefits, to boost their nation. It's one of the reasons they're so anti-immigration at the moment: they're on the verge of being rewarded for their suffering, at least as far as the general populace is concerned. Obviously how that plays out in reality will be a different question.
Anyways, once these cars start being made by someone who makes a salary that doesn't look like a joke to someone from a modern nation, I imagine their prices will rocket up to match other manufacturers.
I still don't get why people are so shocked that Chinese products are cheap. It has been this way for decades at least.