How do chinese sellers make money - Page 1
Forum section: electronics / general

author: nvidia
author_rank: Regular Contributor
timestamp: November 02, 2018, 12:17:44 am
content: always wanted to know how chinese sellers make money from selling items so cheapEG$0.90usd mp3 players$6 portable color handheld game loaded with nes games$1 led flash light$0.40 usb led light$1.50 fm radio with built in speakeri know they don't pay there workers much but still how are they making a profit

author: cdev
author_rank: Super Contributor
timestamp: November 02, 2018, 12:23:57 am
content: Probably at the beginning they just sell based on cost plus nothing to build their reputation up, so its entirely possible they may even lose money at the beginning. I think they may also get very low cost or free mail - it must be very cheap.Also, their cost of living and wages may be very low compared to ours.Also just like elsewhere, many online businesses are likely just that one person.One person may also run a bunch of ebay stores that specialize in different things too.Quote from: nvidia on November 02, 2018, 12:17:44 am

author: thm_w
author_rank: Super Contributor
timestamp: November 02, 2018, 12:26:34 am
content: https://www.eevblog.com/forum/projects/how-come-this-board-is-so-cheap/https://www.eevblog.com/forum/beginners/chinese-parts/

author: audiotubes
author_rank: Regular Contributor
timestamp: July 19, 2023, 07:35:59 pm
content: I guess everything is subsidized. It is hard to imagine any other business model based on the prices of goods and shipping.

author: aeberbach
author_rank: Regular Contributor
timestamp: July 19, 2023, 08:57:36 pm
content: I think one way is that items are not shipped individually. All those eBay sellers claiming to be local or having local stock are basically lying, they have a distribution centre and ship from there after a batch shipment from China arrives. Hence the delay of about one week on everything compared to an actual local seller that might ship within 1-2 days.

author: VK3DRB
author_rank: Super Contributor
timestamp: July 20, 2023, 02:02:05 am
content: I bought a USB to serial converter device delivered to my door from China for half the price of the FTDI FT232R chip alone in 10K volumes. The device has other semiconductors, headers, USB connectors; is well laid out on the PCB. It works on 5V, 3.3Vand 1.8Vlogic and works a treat.It is possible employees steal chips in China, the chips are fake, the chips are reused, or maybe FTDI provides special prices to the Chinese. My guess is some back alley operator reclaimed the FTDI chips off old boards.

author: johnboxall
author_rank: Unknown
timestamp: July 20, 2023, 02:51:33 am
content: Free postage from China.Very low living and wages costs.Much, much less red tape and regulations.Much lower margin expectations.Profit via volume, not quality and service.Pay less tax as customer payments received into foreign/HK-based bank account.

author: floobydust
author_rank: Super Contributor
timestamp: July 20, 2023, 03:04:08 am
content: Aliexpress has jacked up prices and jacked up shipping costs - so they aren't so cheap now. Many items are quite expensive, I can actually buy them now in store for less.

author: SiliconWizard
author_rank: Super Contributor
timestamp: July 20, 2023, 04:03:00 am
content: Yep, the cheap prices were pre-2020. They have now become outrageous.

author: Berni
author_rank: Super Contributor
timestamp: July 20, 2023, 05:15:09 am
content: Yep looks like China is slowly loosing those heavily subsidized shipping privileges.A lot of the products are still dirt cheep, but the cost of shipping them to the other side of the world makes the total price go 3x

author: amir.razzaqi
author_rank: Contributor
timestamp: July 20, 2023, 06:56:23 am
content: Quote from: nvidia on November 02, 2018, 12:17:44 amone of the most money consuming part of production of some thing is related to its design and test, Chinese bypass it by copying and reverse engineering. in fact they steal some part of other factories benefits.

author: BeBuLamar
author_rank: Super Contributor
timestamp: July 20, 2023, 10:44:40 am
content: The Chinese goverment has a lot of money so perhaps they subsidize those business to help them kill off the USA based online businesses?

author: m k
author_rank: Super Contributor
timestamp: July 20, 2023, 05:04:26 pm
content: Regular international postal contract include returns, it used to be so that all small internationals were free.Then China happened and balance was no more, so others subsidized small China packages.But production cost is still a mystery, few dollars a day for living is not much and it's multiplying, but still.On the other hand, millionaires are not growing in trees and bigger money is also multiplying.

author: mendip_discovery
author_rank: Super Contributor
timestamp: July 21, 2023, 06:30:31 am
content: I often wondered if the stuff being sold is sometimes the stuff that didnt meet the requirements that the major manufacturers have so it gets sent out for scrap and ends up being used in copy/fake devices. As well as the bits that get pinched etc etc.

author: Berni
author_rank: Super Contributor
timestamp: July 21, 2023, 06:52:50 am
content: The Chinese also do the "ghost shift" trick.After the factory closes the workers sneak in and start up the production line themselves. They use the reject or expired materials to do a production run, take the products with them and sell them themselves. That way they can make more money than what they get payed to work there.But id say it is mostly the economy of scale combined with the race to the bottom. They produce everything locally using cheep workforce that borders on slave labor. Doing it in such massive volumes makes cost per unit go down and down. China heavily pushes for high productivity, not being concerned if there is actually a demand for the products, if you sell them cheep enough then someone will buy it. Then there is also the Chinese government artificially keeping the value of there currency low. This makes the cheap products appear even cheaper, ensuring that exports are thriving. Since normally having so much more exports than imports would make the countries currency rise as others need the currency to buy those goods (this would eventually make them too expensive for other nations to bother buying from them)

author: Miyuki
author_rank: Frequent Contributor
timestamp: July 21, 2023, 07:29:44 am
content: Still have plenty of people willing to work for almost nothing: " around 13% of its population falling below this poverty line of $5.50 per day in 2020" and the big group will be just slightly above this line.And they will "happily" work double the hours "westerners" do.Shipping and the entire export business is subsidized.With the volumes they sell, just a single-digit margin will turn out liveable moneySay they will have a 5% sale margin, it is easy to enough such garbage to stay alive

author: m k
author_rank: Super Contributor
timestamp: July 21, 2023, 05:25:24 pm
content: Maybe yuan is not as cheap as it seems to be.Current system is pulling USD down, at least a bit.

author: EPAIII
author_rank: Super Contributor
timestamp: July 23, 2023, 10:30:11 am
content: Seventeen posts have just about covered it. I may have missed it, but the one item that I did not see is no unions.In short, socialism at it's very best.

author: paulca
author_rank: Super Contributor
timestamp: July 23, 2023, 11:14:39 am
content: Quote from: floobydust on July 20, 2023, 03:04:08 amIt would seem that AliExpress have been told to adhere to the laws in the countries they are selling in or stop selling there.You will also notice this has caused about 30-40% of sellers to refuse to ship to certain locations and instead put the shipping to those regions as costing $1000.For example, when I order from AliExpress, non-excempt items will charge me VAT and duty.

author: audiotubes
author_rank: Regular Contributor
timestamp: July 30, 2023, 03:04:04 pm
content: Quote from: EPAIII on July 23, 2023, 10:30:11 amYou forgot to mention no OHSA, FDA, etc

author: SiliconWizard
author_rank: Super Contributor
timestamp: July 31, 2023, 11:45:07 pm
content: Quote from: audiotubes on July 30, 2023, 03:04:04 pmThe chinese equivalents are actually pretty stringent from what I have experienced. Try selling a product on the chinese market and see how the regulatory part goes. One may suppose that they are being more strict with foreign products. That may be so, but I have no proof that they don't apply the same rules to their own products sold on their own market.The thing here is that, pretty much like for any country, local regulations to a large extent do not cover what you export. So conformity is all on the importer's shoulders, and many importers of chinese products are, how to say it, a bit oblivious. Of course the Chinese do take advantage of this situation. We do the same when we can.

author: SL4P
author_rank: Super Contributor
timestamp: August 01, 2023, 03:10:59 am
content: Next to no R&D costsLow labour costsNo documentation or testing costs.No support- makes for disposable, copidbgarbage.

author: Berni
author_rank: Super Contributor
timestamp: August 01, 2023, 05:41:49 am
content: China does have a lot of requirements on foreign businesses because they want to have as much control as possible. They can already exert a great deal from the CCP over domestic companies, so they are used to being in control.The government also finds the cheep workforce for local factories useful, so they won't really do anything about the abuse of workers. They are instead busy spraying the dead plantlife around roads with green paint so that the environment looks less destroyed to the environmental inspectors.

author: all_repair
author_rank: Frequent Contributor
timestamp: August 01, 2023, 05:56:25 am
content: Primarily due to over-competitive environment. No one wants to work so hard for so little if they can.It is not something the CCP want to see, and trying very hard to change the low margin culture and setting. Enjoy the super good deal when you can, just don't ask for $100 services for a $1 product, and then come crying here for ..............It is cheap because it is the assembly services they are charging.

author: bookaboo
author_rank: Frequent Contributor
timestamp: August 01, 2023, 08:12:11 am
content: Chinese exporters get an "Export Rebate" on most products they ship, 9-13%, so that's a big factor.

author: peter-h
author_rank: Super Contributor
timestamp: August 01, 2023, 10:06:59 pm
content: I don't know the answers to the OP's specific examples, but let me make some general points:This is the #1 factor. In the 1st world, everybody is trying to climb the ladder to having a big 4x4 parked outside (1 for the man, 1 for the woman, and the 2nd one needs to be a T80 tank for the school run which is extremely hazardous to the kids). Houses cost a fortune and most people and not paid off for 30 years. Mountain bikes cost 4k (2k before covid). And so on. Life is expensive and "life ambitions" are extremely high.In China most factory workers do not (yet) have these expectations, so the ecosystem there caters for people who get a few hundred $ a year. Everything is pretty cheap. I know this as I come from a formerly communist country. You spent 5 years saving up for a TV (1960s). Rents were cheap, say $5/month. But you earned $20/monthA lot of stuff they use are made in the West but the mfgs sell into China forfar lessthan they sell down the road. For example Intel might sell a CPU in the West for $100 but they sell the same chip to china for $20.Good economies of scale and proximity. You make something. PCBs are made next door. Metal boxes made 2 doors down. Injection moulding 3 doors down.Compliance is mostly fake. CE declarations are fake. ROHS is fake.China has a lot of capital equipment which was set up there by western firms, years ago.A lot of stuff they are selling is stolen from the stock of a firm which went bust. Chinese mfgs go bust at a fantastic rate. The stock then disappears rapidly and pops up somewhere else. Nobody can keep track of it. The place is dysfunctional, tax evasion is rife...There are govt subsidies e.g. DJI is heavily supported by chinese govt.A lot of stuff is surplus stock which somebody just wanted to get rid of.Western chip makers charge a lot because they can. So an STM arm32 chip might be $5 while the chinese equivalent (one of their "fake" 32f407 etc) is $2.Add up all these factors and you get a much lower price.However a $0.90 mp3 player was definitely stolen stock

author: Bud
author_rank: Super Contributor
timestamp: August 01, 2023, 10:36:51 pm
content: I always laugh when i see someone writing Oh, they only make $20 a month in thay country, Oh, they only make $5 a month in the other country. It means exactly Nothing, because you are not giving figures on cost of living in those countries. How much the consumer's grossery bucket cost for a day. How much it costs to raise a child, to get education. Spoiler: in many those countries University/Colledge education is Free. Medical care is Free. So who is the poor countrg here?

author: peter-h
author_rank: Super Contributor
timestamp: August 02, 2023, 08:32:29 am
content: That is what I said. You are paid little but everything (basic) you need to buy is also very cheap.Then exports from the said country are accordingly cheap.China also benefits from many "distorting" factors e.g. widespread tax evasion.Another curious thing is how can they send €1 stuff to Europe by post, with postage included. It would be completely impossible to do this in the opposite direction. Does anyone know how this works? AIUI they use consolidated sea freight and then the packages are injected into the European postal system (which is why it takes a number of weeks). It doesn't really explain it though, unless the post offices here are doing some kind of amazingly special deal for pre-sorted bulk mail.

author: gf
author_rank: Super Contributor
timestamp: August 02, 2023, 09:14:23 am
content: Quote from: peter-h on August 02, 2023, 08:32:29 amThe Universal Postal Union (UPU) sets the conditions for international postal traffic. In the UPU, China is still considered a developing country (for historical reasons dating back to the 19th century) and receives subsidies. This, of course, distorts international competition.

author: Berni
author_rank: Super Contributor
timestamp: August 02, 2023, 09:33:04 am
content: The cheep shipping from China is the result of the Universal Postal Union.Because back then China was classified as a developing country, this made them get huge discounts for shipping services. This is at the expense of higher cost of shipping between the rich nations, who can afford it. This was meant to help poor countries. But Chinas export centered strategy used this discount as a path to flooding the worlds markets with there cheep exports. At the same time China made sure that the local currency does not raise too high in value, this makes exports look even cheaper to other countries. For example Switzerland didn't do that and had its currency skyrocket, now limiting its growth potential as exports are no longer cheep for others to buy, hence why only the high quality brands can survive there as they are justifying the high price with a high quality product.Cost of living is indeed very varied from country to country. The countries with poor economies have very low wages, but stuff in stores also costs less. In Europe a number of people seek employment in a neighboring country for this reason. You can drive to your job across the border to get a higher paycheck, but actually live in the poorer country where everything is cheaper. Tho the price differences are mostly for locally produced things (like food). For purely imported things (like an Intel CPU) they don't really get that much cheaper.Here in Slovenia we are not exactly a rich country (but still well ahead of the balkans down south) while computer parts are actually a fair bit more expensive than in the USA or Canada.What the poor countries get in the form of cheep import products is things like refurbished stuff, 2nd hand products etc.. Nothing goes to waste there, if it still works, it will get used.

author: Haenk
author_rank: Super Contributor
timestamp: August 07, 2023, 01:20:51 pm
content: I highly assume sales is subsidized on many levels.E.g. we have certain products we are "asked" not to resell into the chinese market. These products come from a gigantic, state-controlled company and are are sold via a sub-company.Funny thing is, we can pretty much calculate what a raw material price would likely be, the final product costs about half. Go figure. And I assume this is valid for a lot of products.

author: schmitt trigger
author_rank: Super Contributor
timestamp: August 07, 2023, 02:43:42 pm
content: In addition to everything else that has been discussed, I also believe that the Chinese take a long term profit view. They are willing to work very, very hard for minimum-to-no-profit, for a sustained period, to weed out the competition.Sort of an economic war of attrition.

author: Kasper
author_rank: Frequent Contributor
timestamp: August 07, 2023, 06:51:06 pm
content: Do Chinese sellers make money?Does their government and or large corps subsidize them to crush the competition?Reminds me of when Arco entered BC, Canada around the year 2000. Gas prices were cut in half. Many small stations were sold to Arco. They probably couldn't afford to lose money on every sale for as long as the bigger players. Once the little stations were taken over, gas prices went back up.