The Plight of Chinese Consumers

As everyone knows, Apple unveiled several new products yesterday at their developers conference. New updates for iOS, OS X, and of course, the new Macbook Pro was the most discussed. Of most interest to me, was the new Chinese features that Apple introduced to iOS and OS X, especially the new language updates for Siri. It seems that Apple is concentrating more and more on its biggest market, which is China. I’m glad that companies such as Apple are finally becoming more aware of Asian consumers, and I hope more PC manufacturers can do the same, and more support for services such as RenRen, Youku, Baidu, QQ, Weibo, among others. China is the biggest market for luxury goods, and Apple is considered the premier manufacturer of computing devices in the world.

Which begs the question, how many of Chinese consumers can actually afford Apple products? The Macbook Pro with Retina Display in China actually sells for RMB 16,488!!! This is equivalent to more than $2500 USD. At Foxconn, China’s manufacturing plant for many US companies including Apple, Workers make a mere $386/month (as well as working 80+ hour weeks)! So, when the average Chinese family makes between $250-500 USD per month, how can they afford to buy the products they manufacture. This is the root of the problem; Asian workers often have to suffer with low wages in order for US consumers to get cheap products. Cheap labor = cheap products. That’s how Apple, HP and other companies can sell products for cheaper in the US than other countries. For China and other Asian countries, even though they manufacture in that country, they have to re-import US products and pay a substantial markup in order to get the same product!

The reason why luxury good manufacturers such as Apple, BMW, Gucci, Louis Vuitton, Audi, etc can do so well in Asia is because of how culture works over there. In Asia, be it China, Japan, Korea or other countries, having a brand name product is seen as a status symbol, elevating you in the eyes of other Asians. If you can afford luxury goods, you are seen as more wealthy and successful. So the demand for these products are very high (and why there are so many knock offs in China). Because the demand is high, Apple and other companies can mark up their products substantially (such as Macbooks, iPads, iPhones, etc) and get away with it. 90% of Chinese consumers will probably have a hard time affording these products, but the very rich 10% can afford them, thus boosting their status.

This may be the most profitable way for Apple to run. However, it is not the ethical way. I think that more Chinese and Asian consumers should be able to afford their own products, and people shouldn’t have to sell their kidney to buy iPads. In order to do this, Apple should raise wages at their plant, increase the price of their products in the US, and lower the prices of their products overseas. This will anger US consumers, but in order for someone to gain, others have to lose. This will also cause Apple to lose profits, so corporate greed will probably prevent this from happening. But someday, I hope that the world will be more fair, and workers in other countries shouldn’t have to suffer for American consumers’ benefit.





2 responses to “The Plight of Chinese Consumers”

  1. Stephanie Avatar

    What I don’t understand is why Apple just can’t siphon some of the goods manufactured at Foxconn to Chinese stores directory and sell its products at a much lower cost in China. I guess that this is just one of those business procedures that I don’t understand.

    As an American, I actually think that Apple should just start trying to manufacture their products in the US, a place with less bribery, more transparency in business, and laws that ensure that the workers are paid well. The problem with its current setup is that Apple is currently contracting with Foxconn and doesn’t have any directly control over how much Foxconn’s workers are paid.

    If I’m right, China has a very unequal economy in that it has some extremely rich people (the bankers in Shanghai and some others) and many extremely poor people (everyone else). Since most luxury goods (not necessarily Apple computers which everyone expects to be expensive, but things like Coach handbags and thousand dollar shoes) have a market in the US, but very few people who can afford them, I suppose that the same situation exists in China. I’m pretty sure that the only reason nobody in the US has sold their kidney to buy iPads is because organ markets are squashed by the government here.

  2. Tong Zou Avatar

    You’re right, China’s economy is much like the US in that there’s a HUGE gap between rich and poor. But China’s middle class is much poorer than America’s middle class. Indeed, many companies should bring their manufacturing plants to the U.S instead of China. That will encourage more Chinese to compete instead of selling knockoff products, as well as lowering unemployment here.

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