Why are "Made in China" products cheaper than "Made in India" products, but the salaries in China are much higher than India?




来源：三泰虎    http://www.santaihu.com/46102.html       译者：Joyceliu



Sthitapragnya Deshpande, worked at China

You are right in that salaries in China are generally higher than in India (see analysis of salaries in China at the bottom of this answer).

A few reasons for the above are

1) Subsidies

(Do you know that made in China items are cheaper outside China - in India and in UK - than in China itself?)





2) Low cost of R&D

(In China, these costs are usually footed by the Western company that wanted to initially manufacture these products for cheap). In India, on the other hand, companies try to do their own R&D, which is very holier than thou, fair, but wastes time reinventing the wheel.



3)Excess manufacturing -

When manufacturing for a western client (for example: Apple for iphones, or Bose for headphones, Burberry for clothes), most Chinese companies overproduce to address the 5-10% rejection rate. The rejected items are often of good quality, but not to the high specifications that were required (the phone may have a tiny 0.5 mm scratch, its shade of white may be a tad lighter / the headphone jack may be 0.01 mm longer / the dress may have one loose uncut thread at the inner sleeve).


当为西方客户生产产品时(例如:为苹果生产iphone，为Bose生产耳机，为Burberry生产服装)，大多数中国公司为了解决5-10%的退货率而过度生产。验收不合格的商品往往质量也很好，只是没有达到要求的高规格(比如，手机可能有0.5毫米的微小刮痕，白颜色可能有点浅/耳机插口可能长了那么 0.01毫米/裙子的袖子里可能有一条没剪掉的线头。

All of this is then marketed under the Chinese manufacturers name (rationale: after all, it is he who actually made it! The western company only sent the design and specification, who knows who actually designed it... perhaps it was designed by an economically paid person / immigrant from Russia / India / Italy?). hence it is sold for half the cost (the manufacture still makes a profit).

Now multiply the above scenario with a million companies and you have a fair idea of the reason why Made in China products are cheaper than Made in India.



The few places in India where we do have this system are the leather goods shops in Dharavi, and clothes sold at Fashion street in Mumbai - however the scale in China is a million times bigger due to the way Chinese people think.

For example: Nike manufacturers much of its sports wear in Bangalore from a small company - that company's loyalty to Nike is high. It does nto market / sell these clothes to anyone in India.

If it were thinking like a Chinese company, that same company would have marketed the rejected clothes in India, two years later it would have terminated the contract with Nike and made the same clothes under its own brand name. two years later, it would have sent its people to Europe - especially to sports meet, looked at clothes made by well established brands, modified them to suit its clientele and marketed a new line - exporting it.




Nike of course would have found another manufacturer meanwhile - and the cycle continues. I walk down my local markets and am always stunned by the excellent variety of clothes (Fyi clothes made in India last far longer than Chinese clothes - I still use clothes made by Madura coats, Vimal, Gwalior, and they look first hand. Chinese clothes look better, but last shorter - great for a country where giving employment to more people is far more important than making long lasting products. remember - The latter result in fewer jobs)

与此同时，耐克当然会寻找另一家制造商——而且这种循环还在继续。我走在当地的市场上，总是被琳琅满目的服装(顺便说一句，印度制造的服装比中国制造的要耐穿得多——我仍然会穿Madura coats、Vimal、Gwalior设计的服装，而且它们看起来都是第一手的。)中国的服装看起来更好，但不那么耐穿——对于一个让更多的人就业远比生产耐用品重要得多的国家来说，这很好。记住——后者导致工作机会减少)

Revelation - As for salaries in China -

Average monthly salary of a factory worker (qualification = graduate or lesser) in Guangdong in a factory making cellphones = 4,000 - 6,000 RMB (INR 40,000-60,000).

Average monthly salary of an entry level normal software engineer (not from one of the top colleges) in Shenzen = 20,000 RMB (2 Lakh rupees)

Average monthly salary of a well qualified (IIT level) Chinese software / IT professional in Baidu and similar companies - after working for 5-10 years = 50,000-70,000 RMB (5-7 lakh rupees)


广东某工厂生产手机的工人(学历=本科或以下)的月平均工资为4000 - 6000元(印度4 -6万)。

深圳普通软件工程师(非名牌院校)平均月薪= 2万元(20万卢比)

在百度及类似公司工作5-10年的中国软件/ IT专业高水平人才（印度理工学院水平）平均月薪= 5-7万人民币(50-70万卢比)

Since we are talking about tier 1 cities in China in the above, we should compare the salaries to cities like Mumbai and Bangalore. You will notice similar trends in smaller cities - for example: comparing salaries in Lucknow and Trivandrum with salaries in Hangzhou.



Naman Bhalla, I learn something new about China everyday

China’s labour force is highly productive. Labour force in China is usually considered as one of the 4 main pillars of Chinese Economy. [An average Chinese Worker’s Annual income is about 5 times higher than an average Indian worker, and an Average Indian Worker spends more number of hours in a year working than an average Chinese Worker] You may get an idea about the wage-differential between India and China on this link - China-India Wage Comparison - Asia Business News

Despite a higher salary in China, the Chinese products are cheaper due to economy of scale, better infrastructure to move the products in and out, easier government regulations (a mix of both free market and state controlled economy) , and Special Economic Zones (such as in Shanghai Free Trade Zone). IIM-B published a nice article explaining why are Chinese products cheaper than China. You can access it here Why are Chinese Products Cheaper?




Lin Xieyi, keen interest in Economics

It is simple math actually .

India and China have similar populations( 1.32 billion and 1.38 billion respectively) Assume the entire population of China is a single Chinese employee, and the entire Indian population is also a single Indian employee.

India’s GDP is US$2.2 trillion while China’s GDP is ~US11.2 trillion. Assume the entire GDP of India is a sale of 1 widget to the world for US$2 at US$2 each while the entire GDP of China is a sale of 6 widgets for US$11 at US$1.83 each.Therefore Made in China is cheaper than Made in India.




Now assume the government tax the company at 30% and the company which produce the widget takes 40% of sales price, while salary of employee is 30% of sales. Therefore the Indian employee earns 30% X $2= $0.60, while the Chinese employee earns 30% X $11= $3.30, which is about 5 times the Indian employee’s wage. This can be cross-checked with actual data: As of 2016, average salary of Chinese employee is US$10,213 per annum[1] , while average Indian employee is ~ US$2,000 per annum[2] . Pretty close

现在假设政府对公司征收30%的税，而生产小部件的公司收取40%的销售价格，而员工的工资是销售额的30%。因此，印度员工的工资是30% X 2美元= 0.60美元，而中国员工的工资是30% X 11美元= 3.30美元，大约是印度员工工资的5倍。这可以与实际数据进行交叉核对:截至2016年，中国员工平均年薪为10213美元，印度员工平均年薪为2000美元。十分接近。


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