One peculiarity of living in China is that you find that almost everything you buy is either (a) more expensive than it is elsewhere, or (b) worse quality or (c) both.
From Zara to Ikea to Gucci, from electronic goods to bicycles, the Chinese consumer gets repeatedly stiffed.
There are two obvious reasons for this. The first is that goods sold by foreign companies, even those that are made inside China, are liable for import duties, as well as a steep sales tax.
The second is that China is one of those curious markets in which the higher a product is priced, the more desirable it is. For the Chinese middle classes, their ability to shop is a point of pride in itself, and the more money they pay for their handbags, the more prestige they carry.
However, there are also two important factors that persuade Chinese manufacturers to send their best products overseas rather than into the domestic market.
1.China has a poor domestic distribution network. It is expensive to transport goods across China’s vast geography. Tolls on roads are expensive and the train network is still being upgraded. This all adds to the cost of a product. Since most of China’s major manufacturing hubs are near the sea, it is much simpler for factories to ship their products overseas than contend with sending them inland.
2.China’s banking system is still relatively unsophisticated. Chinese factories sell their goods to foreigners because they can trust the letters of credit and guarantees that foreigners provide. By contrast, a Chinese wholesaler or retailer may offer a better price for a good, but there is always the risk that they will not prove credit-worthy.