> All of this is little comfort to McGrath, who chafes at the thought of the Postal Service helping Chinese merchants poach his customers. “All of us sellers are selling a lot of Chinese goods in America but at least we’re creating jobs, making money, and adding to the economy,” he said. “But when people buy direct from China that’s adding nothing to the American economy.”
I understand the seller's frustration - their means of supporting themselves has been taken away, but I'm not sure I buy the argument that we need the intermediary just to "add to the economy". To me it just seems like an unsustainable business model that was destined to die once global communication became much easier, not just because of the various treaties and agreements of postal services.
The moment that chinese sellers could get a site available to a global audience, the need for an intermediary vanished; before you essentially paid for the connection; an extra $18 on a remote controlled toy boat was paying for access to the seller's inventory, supplied by his Chinese connections.
Now, there's no need for that connection or that warehouse - the visibility for any foreign seller is much greater, even to the point that it probably would still be valuable even without the USPS trade deal.
It's unfortunate, but this just seems like a model that was destined to die.
But the core of the argument is that this isn't pure capitalist economics; the government is essentially subsidizing China's ability to compete in America. It'd be one thing if China could make it and ship it for legitimately cheaper, but abusing a treaty loophole in USPS regulations isn't the same. That's an unfair advantage.
There's also a second argument at play: If China can make a product for $10 cheaper, legitimate shipping included, because they're allowed to abuse their workers and pay them much less, do we trust pure capitalism to properly prioritize the values of the American people? This really is the case of, say, Apple's electronics plants in China.
As to your second argument, I'm still not sure why it is legal to buy or own materials in the US created by human rights abuse. Let's take a case of a Chinese good produced by political slaves in prison. By buying or owning that good, a person is financially supporting the abuse that went into creating that good. Same applies for something that is produced for cheaper due to an ability to pollute in ways that aren't legal in the US (or other countries, this argument need not be just for the US).
But there are some digital goods where we do not give this same treatment (namely digital material involving really bad child maltreatment). Regardless of the legality of where the material is produced, owning it in the US is illegal because it couldn't legally be produced in the US and funding such illegal action elsewhere is considered morally wrong enough to ban.
Simply put, I think the core idea should be applied to all financial transactions. If one is buying a good or service that would be illegal in the US due to harm to another human, it should be illegal to buy or own in the US, even if where it is produced is legal. The law should prevent a person from harming another human by shopping around and finding wherever has the least legal protections.
The problem is that the US has no moral high ground here. We too have prisoners manufacturing goods below minimum wage, and while you won't be jailed in the US because of your political affiliation, you definitely can be jailed because of your religion, ethnicity, etc.
If we applied this to foreign transactions, foreign countries could easily use the same grounds to block goods and services coming from the US.
I agree, but I can't see how you would enforce this, whatever mechanism you put in place would be worked around immediately. Plus, it's not like US corporations who are benefiting from what is next-to-slave-labor are going to be terribly vigilant in making sure their manufacturers are compliant. In the end, greed almost always wins, even in the most "advanced" societies.
I think that second argument is a different case than the one this thread concerns. This isn't about different manufacturing environments - it's about literally the same product being distributed via a middleman or not.
We've always benefited from Chinese labor abuses, and whether an American intermediary is involved doesn't change that.
Hum... put yourself back in the 60's. Imagine you're signing a contract that says "I, the Postal Service of the country NNN, will deliver any letter that comes from any country to any city that I reach, no matter if it'll cost a 3 hours plane flight to deliver a 1 oz envelope".
Fast forward to 2017, yes, now the agreement seems unfair because the deliver of goods changed a lot. Perhaps should be reviewed. But I wouldn't say it just worked on theory back then, neither will I say that now it is unidirectional in practice (because you still can make it go in any direction).
And the main point isn't just that things made in China are cheaper. It's that China has so much freight going to all parts of the world that putting one container full of envelops with a single button inside doesn't cost a thing, so they win in on how much it costs to take an envelop from a post office inside China and deliver it to a USA / Europe / South America port.
It costs about US 1,900 to take a container from Shangai to New York (source: https://www.searates.com ). That is cheap.
In your first example, I doubt mail would be delivered to literally any remote location in the country, and only if there was some services delivered there sporadically would mail tag along for the ride. Back then they didn't entertain such ludicrous ideas as we do now.
Shipping a container from Shanghai to NY is not the issue, it is that China pays less for shipping along the same route in the US and other western countries. They are paying less than others, on top of the fact that mail is largely unidirectional - so they're kind of cheating twice. If the shoe was on the other foot they'd be on top of it because they have more intelligent leadership than Western nations.
>> "trust pure capitalism to properly prioritize the values of the American people"
But who decides the values of the American people then? Should the govt's approach be "We know this product was made by kids, so it is banned", or "We are educating you that this product involved child labor, it is upto you to use your values now"?
I think the second approach will cause trivial change, at best.
If so, wouldn't the approach be correctly demonstrating that these values are only trivially important?
Vegans and various religious people make different purchasing decisions because of values they actually find important enough to change their lifestyles for.
I agree with you. That's why I said: "I think the second approach will cause trivial change, at best". From my observations as an outsider living here for 6 years or so, even widespread knowledge that factory conditions are bad will cause only a trivial reduction in sales.
As per your second argument, according to the same reasoning no products manufactured using forced prison labour like that of the US prison system should be legally sold.
That's not a great rebuttal, because most of us who would be opposed to the ownership of things created under Chinese prison labor would also be opposed to the ownership of things under American prison labor. (I'd be fine with the American prison labor if they were paid a fair, living wage).
Generally, livable wage is not defined as "you won't starve to death" but a wage high enough to support a normal living. In the context of prison, this is a little abstracted because you can't really abstain a normal state of living.
I took a quick look at what people are sending their SOs in prison to spend at the commissary to buy things like deodorant and snacks (http://www.prisontalk.com/forums/archive/index.php/t-682271....). The numbers ranged from lower ($40) to several hundred a month. Assuming $100, they'd have to work over 11 hour days.
For a living wage, you'd probably want to follow the rule that housing + food + transportation doesn't go over 2/3 of income. Especially bad is that 30¢/hr doesn't let you put nearly anything into savings. So I think it's easy to counter that argument, even ignoring the issue of imprisonment.
I'd agree intermediaries aren't really adding anything of value.
The problem is however, even in cases when you can produce something as cheaply in the US as in China, a Chinese seller can still beat you on price because they pay less for shipping.
Well, wouldn't the tradeoff there be time? In the past when I've ordered products from China or Korea, the tradeoff for free or $.99 shipping was that I had to wait two weeks. I do remember some shops had started keeping local warehouses for faster shipping times, so it seems like the foreign sellers are coming at it from both ways; they will ship small parcels that take awhile to arrive, or they'll send locally and eat the shipping costs.
I'm not convinced at the moment that it's the shipping alone that is causing the issue with the US sellers, especially given the limitations of the cheap shipping agreement (under 4.4 lbs I believe it said).
It means cheap items (like small plastic items etc), where the cost of manufacture is very low, even if they can be manufactured at the same cost in the US can not beat the Chinese seller because they can't compete on price.
A small domestic package just costs more than one shipped from China. So yes, it's possible they can instead compete on delivery time, and they do.
But all else being equal, it seems dumb that they can't be given access to the same pricing as Chinese sellers if they conform to the same rules (drop off at shipping hubs, labeling standards etc).
For your consumer value, sure, but it's still a quirk that you can ship something across the glove cheaper than across states. It's because you only pay China for shipping, not the US that has to deliver it inside the border.
Are there packages for which one could trade cost for time, by shipping from USA to China (or more realistically, Mexico) first and then shipping back?
Components are actually one of the three categories of things I order from China. The other two being cheap trinkets and casual clothes. China-ordered components come from the same factories anyway, trinkets are binary (they either work or don't, not much space for quality difference), and regular clothes are crappy throwaway items regardless of where you buy them.
Anything else I consider too risky. In particular, I never order consumer electronics from China (unless I explicitly go for a particular Chinese brand). The crap quality is not worth the price savings.
I'm the same way with electronic components, though I tend to buy certain often-badly-counterfeited parts (e.g. logic-level MOSFETs, TTL-to-RS-232 converters, etc.) from reputable sellers like Digi-Key since I've run into a lot of issues in the past.
For stuff like resistors, capacitors, some microcontrollers, power supplies, etc., the Chinese sellers are pretty reliable.
It depends what you're ordering. In many cases they very much don't come from the same factories. Panasonic, Rubycon capacitors on eBay are generally fake. From digikey, generally not fake (though I've heard stories of them making their way into the supply-chain there too).
Many small shipments across the ocean are costlier than one large shipment which is then distributed locally. USPS (and other national postal services across the world) will need to increase the prices for those small shipments and make profit out of it. I can only guess that in addition to this huge quantity discounts the shipments are subsidized by the Chinese government to accelerate export. US and other countries should learn from them...
Given that in my experience, Chinese shipping times are utterly random (as little as one week to as much as 2 months), I'd expect them to actually batch all those small shipments and send them regularly in bulk on ships (with the Chinese post, not sellers, doing the batching).
I'd need to see a citation of that really, or some ballpark estimates, to give it any credence.
I wouldn't necessarily expect local-to-local shipping always to be cheaper. But I'd expect there to be at least one option where you can bring a pre-labelled package to a shipping hub and get it sent at the same or lower cost.
Also the seller's claim that direct doesn't add anything to the economy is false. That surplus will be directed elsewhere, hopefully to something more productive than what has become an unnecessary intermediary.
I don't think so. Others are subsidizing the inefficiency of sending something over from the other side of the world instead of using a local seller. That's the opposite of the broken window fallacy. Like breaking windows, subsidizing the international postal service is the economic harm.
Take that subsidy away. If the intermediate seller can still survive, then he is still providing some economic benefit.
The surplus comes from the fact that US buyers don't have to pay a percentage to the intermediary, so they can spend it on other things, like going out to a local restaurant more often.
Forgive my ignorance, but can't it go the other way also?
A contrived example...
A person has $X that they spend every week at the local town restaurant. They see they can buy a cool new widget from a Chinese vendor (from the article) for $Y. Over the course of the next few weeks, said person spends a little less at the restaurant so as to save up $Y, ultimately purchasing the widget once enough money is saved.
In this example the person is contributing less to the local economy.
It can, and gets even more complicated when that widget was available locally for $Z and $Y < $Z. Was $Z so much greater than $Y that the person would have never started to save for it? Or did $Y mean they were able to start spending at the restaurant again sooner? How do you calculate the value of the cool new widget once the person has it?
>To me it just seems like an unsustainable business model
My experience with this isn't quite how you're describing. The Chinese vendors are sort of having their cake and eating it too. They'll often, for example, not be honest about the the shipping time, their return policies, product details, ability to answer product questions, and so forth. Even if the selling platform does something about it, another Chinese seller pops up to replace any that are booted out.
So, for the end consumer, they don't get a true view into what the consequences are of buying from the lowest bidder.
It's difficult for a US supplier to get their value proposition out there on platforms like Amazon, as there is one product listing and multiple sellers. There's no spot to show why your offering that's priced higher is worth it. Better support, return policies, fast shipping, product knowledge, etc.
I think this is slightly different than what the article (and by extension my comment) were discussing.
For some products and items, the difference between the chinese produced items and the actual items is a world of difference (e.g., electronics batteries, power adapters), but that isn't really the business that the article was talking about the cut into - the issue was resellers who would buy up a warehouse stock from chinese producers and sell it at mark-up; with modern postal agreements and websites, there really isn't a need for this particular service.
It's not a matter of meeting shipping times or any other value propositions, it's "do we need someone to resell a toy boat at twice the price when we can buy the same stock directly"
>It's not a matter of meeting shipping times or any other value propositions, it's "do we need someone to resell a toy boat at twice the price when we can buy the same stock directly
That may not apply to toy boats, but it does apply to some things. Take USB to serial adapters, for example. In that case, a middle man does add value. A good middle man ensures that you get what was advertised...for example, the chipset is what the product listing says it is. They also provide better documentation, support, the ability to return the item without high shipping costs, etc, than the direct-from-china seller.
So, yes, it's slightly different...taking into account that in some cases the middleman adds value.
Also, it does still apply if you don't like the idea that the Amazon listing said shipping would be a week and it ends up being a month. That's not just the overseas shipping time either...it's the cultural difference with the Chinese sellers. "Sorry for the delay, it is Chinese New Year, and we're all off on vacation for 2 weeks, and we just don't work , note that in the listing, etc".
Or, it matters if you want to return the toy boat. Your cost to ship it back to China might exceed the total cost of the item you paid.
If these tradeoffs were known before hand, I get your point. Typically, though, they are deliberately not disclosed.
>A good middle man ensures that you get what was advertised...for example, the chipset is what the product listing says it is. They also provide better documentation, support, the ability to return the item without high shipping costs, etc, than the direct-from-china seller.
On eBay, from a customer's perspective, there's no difference between a US seller and a Chinese one. We have the same way of "punishing" them. I cannot punish a US based seller any more than a Chinese one.
>If these tradeoffs were known before hand, I get your point. Typically, though, they are deliberately not disclosed.
Frankly, the stuff I've bought on eBay from Chinese sellers is so cheap that I don't really care to return them. They fall into the price range of "I don't give a damn". In the US an item may be $30. From the Chinese, $7. It's worth the gamble.
(And it really is worth the gamble. I've not been disappointed once).
>They'll often, for example, not be honest about the the shipping time, their return policies, product details, ability to answer product questions, and so forth.
Not been my experience for shipping time. They usually claim such a large shipping window that it is always delivered within that window.
As for lower quality service, I'm not sure I see the problem. The consumer wants to pay a lower amount, and he gets what he is paying for. There's nothing fundamentally wrong or unethical about it. The same principle will hold in the US too. And frankly, I've had plenty of poor service on eBay from US based sellers.
I agree that it's fine if the tradeoffs are clearly disclosed.
I interact with Chinese sellers a lot. Both as a middleman, and for personal purchases. Hundreds of purchases over years. I see a lot of deception, deliberate as well as unintentional.
It could, yes, but it's not been my experience. I suspect part of it is that Amazon is a bit better about blocking US sellers that perform badly, blacklisting the tax id, address, bank accounts, etc, such that bad US sellers can't come back, or create a new entity shedding a history of bad reviews. I don't think they have that same ability for Chinese sellers.
Chinese sellers seem to pop up again with a new fake name overnight on Amazon. And they polute the Amazon inventory with fake goods. To make matters worse, Amazon blocks most reviews that point out receiving fake products.
Value Added Resellers (VARs) may work if you've got margin to work with. When I ran my company, I'd get emails and calls from random people that wanted support for a product I sold but never purchased from me. If your margin is 5%-10% on commodity products, then that type of support does not scale. Adding warranty costs money to replace. You get what you pay for and stuff made in China is hit or miss (more miss than hit IMO). So, adding warranty means you have to replace defective parts more often. Again, doesn't scale when you don't have the margin.
Subsidizing lettermail from poor countries seems reasonable. I might have to work for half an hour to earn enough to pay postage to anywhere in the world; it's undesirable for the recipient to have to pay three months' wages to send me a reply.
Subsidizing businesses abroad seems less desirable, especially if it costs us millions of dollars a year. That should just be part of the price of the good, whether or not it goes through a US intermediary. Instead we have this weird system where purchases directly from China are subsidized by taxes, but domestic purchases are "full price".
All middle men are destined to be automated out by the system, if they add no value then sooner rather than later. However, people selling stuff online in niche markets are still somehow surviving, but sooner or later someone will figure out where they are hiding and get them too. It's all a matter of time.
When they add value, they thrive. When they stop adding value, that's when they get into problems.
Note that whether or not middlemen add value is not under their control. Local resellers add much less value than they used to now that global e-commerce works. Recording labels added value until the Internet came, and now they don't.
In this case small players can have advantages that big players don't. For example should I start shipping container loads of fidget spinners (latest thing among the youth here) from China to Finland I would have all kinds of things to take care of. User manuals, product safety issues, customs, local value added tax, consumer protection things etc. Small sellers operating from China can escape many of these.
I've recently got into 3D printing. I bought a printer from Amazon DE (directly from Amazon, shipped from Germany) that is known to cause fires (but can be fixed with a few simple mods). I doubt it would be allowed if it was made in Europe, but somehow Amazon have escaped regulation and sell these products cheaply made in China. I guess they pay taxes and customs so everyone is happy :-)
The way I look at it is that I self-insure. Much of what I buy direct from China (small electronics modules, connectors, electronics supplies, PCBs, etc) is less than half the price of what local sellers are charging, often way less.
My experience is that way over 95% of items are as described, arrive safely, and perfectly functional. The odd item that is broken in transit (or never arrives) I simply choose not to care about.
I don't need a warranty on a connector, an Arduino clone, or a tube of solder...
You're ordering one of the few things you can safely order from China, though. There's no way for them to screw up electronic components, because they're basically the single stop between you and the same factories which supply everyone else on the market.
I wouldn't try that with consumer electronics though. Anything that's actually assembled to be sold cheap will likely be close to unusable. I can name plenty of examples of crap electronics I ordered from China or saw personally on Chinese markets when I was in Shenzhen. I stick to big western brands in this market simply to avoid completely useless crap.
Be careful about ratings though. Power supply from China can claim a higher rating that it supports. Go near the rating and it starts to overheat or cut in and out. Weather-resistance of devices (outdoor cameras etc) can claim the highest rating, have a rubber seal to 'deserve' that rating, but then have screw holes in the case that freely admit water. Strings of LED lights may claim 'water resistant' but have no sealant where the wire enters the bulb base - which corrodes in a few months. And so on.
Yeah. But all those devices are what I qualify as "assembled" / "consumer" electronics, and I avoid sourcing those from random Chinese suppliers, for exactly the reasons you mentioned. I will trust a pack of SMD LEDs, but I won't trust their assembled form.
(One exception from my "components only" rule are USB cables. I bought a bunch when I was in Shenzhen, and I actually tested them physically before buying; I discovered that if you pick a random USB cable there, there's like 70% chance it won't be able to give you more than ~750mA from a 2A charger...)
I've also had good luck with small bluetooth speakers, with LED/PIR closet lights, with landscape lighting, with RGB LED light bulbs, LED lighting kits, charging cables, and a bunch of other things, even including a network tracing/mapping tool (that one I was sweating a little bit as it was expensive).
It's literally better than 95% (probably more like 99%) good stuff and I'm willing to eat the small amount of slippage/breakage/fraud/poor design.
I saw how they make LED bulbs on-site, on the Shenzhen markets, and thus I'm not particularly confident in them. Related, the company my SO works in sells LED bulbs imported from China (among other things). I bought a bunch of them, and had them burn out on me one by one, with an average life time of a bulb around 1 week (one or two were broken already, a few burned out within first 2 days, rest worked for few months).
In a parallel comment I described my negative experience with USB cables, which I tested on-site to find some that actually work for charging a cell phone. I also sourced USB chargers from China and have two burn out on me. Random Bluetooth headset from Aliexpress managed to completely mess up Android on my phone (how that was possible is beyond me, but I guess crappy Bluetooth 2.x firmware).
So, anecdata to anecdata, I don't share your confidence in any kind of electronic products. I stick to sourcing components now.
These costs were related to the terminal dues that USPS (and other postal services around the world) charge each other in exchange for distributing parcels in their respective countries. [1] The system dates back to the 1960s and was implemented to ensure people could exchange letters internationally -- and the massive increase in small international parcels from e-commerce transactions is now overwhelming it.
Things will change starting next year. The Universal Postal Union (UPU) has adopted a new revision of the terminal dues system [2] that classes bulky letters and small parcels differently from normal mail.
> Countries are currently classified by their level of development, meaning those in the most developed groups pay contributions into the Quality of Service Fund on top of terminal dues to those in the less developed group. This mark up goes toward development projects in the recipient country.
Does this mean "less developed" China will end up being subsidized even more?
The change to the regime for bulky letters and parcels is not the same as the group mergers. I was referring mostly to the former, which will increase the dues for bulky letters and small parcels to a higher per-kg-rate than the current rate that applies to all mail.
The latter change merges some groups but will, to my understanding, not affect China. Groups 1.2 and 2 (countries which joined the terminal dues target system in 2010 and 2012, respectively) will get merged; as will the countries in groups 4 and 5, which are currently transition into the target system. China appears to remain in group 3. [1]
To keep it simple: will China finally have to pay more (because they are also shipping across the sea) to ship a package to middle America than an American at <wherever the port is where the Chinese goods are unloaded>? Or will it just be less of a subsidy.
China will have to pay more than today because a lot of their parcels will fall into the (now more expensive) bulky letter category. The US remains highly-developed, so you can expect terminal dues to remain cheaper than the retail rate. Finally, I suppose the Chinese government will continue to subsidize the transport from China to the unloading port in the US.
In essence: When sending from China, you can expect to just about pay the terminal dues; the international transport is subsidized. You can expect this to stay true for as long as the US is significantly more developed than China.
It seems like it would have been good for them to mention that the white paper they cite giving the estimate of $79 million dollars lost on delivery of inbound international mail at artificially low treaty prices in 2013 also estimates savings of $136 million on delivery of outbound mail at artificially low treaty prices in 2013 for a net profit of $57 million. Also, it estimates that the inbound rates will increase 13% per year between 2014 and 2017, while the rates the US pays foreign countries will only increase 3% a year over this period.
The US postal service has had an inaccurate price model forever. Bulk mail (junk mail) has always been way cheaper to send than first class. It's for the same reason - they act like delivery is almost no-cost. They assume the system is already in place, that someone will swing by your home daily to drop stuff off and pick stuff up. Then adding an item to the pile is really of little consequence. The reality though (for a time at least) became that the mail was largely junk being subsidized by the high price of a few first class pieces of mail.
They've needed to fix the pricing model for a very long time.
Actually I think the article is just PR. While the post offices in north America and Europe deliver Chinese goods at no cost, at the same time Chinese people send millions of very expensive packages to China.
For example Chinese parents who are well off want to have genuine baby food from western countries since the milk powder scandal that hit China a few years ago. They pay tremendous surcharges for a package of baby food and it must be sent from the west.
The same goes for luxury goods. You want to be sure to get a genuine Louis Vuitton bag? Get someone you know to buy it in France and have it shipped to you. The French postal office will cash in 50€ while the costs are certainly far below that.
Australia Post has long had the same problem with shipments from the US.
They've recently opened a warehouse in Oregon, where they'll receive domestic US shipments, and deliver to you in Australia for a separate fee. https://shopmate.auspost.com.au
And shipments from Asia. I recently found something for sale in Australia: $15 plus $10 shipping within Australia. I bought the exact same product direct from China/HK and it was under $4 including international shipping.
I imagine the labour cost is one contributor within Australia. Without volume, no one wants to be doing runs to the post office for a dollar.
With products from the US, I've routinely bought things from Amazon and shipped US-AU and saved money easily - hard drives, memory cards, and even things for which the shipping should make it cost prohibitive like a full-size baby pram.
It's the same in Europe. Local online merchants have no way to compete since just the national delivery costs multiple times the net price of a foreign import product.
It's good for consumers, but also means the domestic e-commerce is severely underdeveloped.
Not quite, some goods have very high tariffs and added import taxes and are checked upon heavily like (where I live) bicycles, anything containing a flat screen and non-consumer electronics (parts).
If you get caught (and you will at one time) you pay the VAT, import taxes and sometimes a fine for not reporting which amounts to more than what you would have payed locally.
It is by no means a fix but the government is not always making it as easy as you would like to skip on duties added to level the playing field.
Postage aside, which is skewed by treaties, the main purpose of import tariffs is to offset labor costs which they do pretty well in my opinion.
I do have to say that in my experience buying from both China and local (Europe) the European product are always of higher quality if you buy cheap, even if the country of origin was China in the first place. Since that is not always needed, you buy China, otherwise local.
I got curious, and indeed looks like a package in Germany is domestically 4€ and within EU 8.89€. However, when sending a small package from Finland it's 22€ domestic and 40€ to Germany with DHL.
So a disclaimer to my original claim: applies only to a subset of European countries.
Yes, I habe worked at a company where we would ship a high amount of construction machine spare parts with FedEx, DHL et al. We had a ~90% discount on their regular prices.
Actually, that’s what you get via the website. In-Store, they’ll be able to offer you a reduced rate costing half of what they offer online. I had assumed the same, and was expecting to pay ~9€, but the employee in the DHL store recommended me the cheaper solution.
And so I shipped a bunch of HDDs from Germany to the Netherlands in 3 days for 3.40€
And if you’re a company, you get a ~90% discount even. The cost isn’t in shipping, but in the employees in the store picking up your package. Pre-Sorted packages delivered directly to a hub are really cheap.
The Irish Post Office is now offering something similar for items bought in the Uk/USA
You get a 'fake' Address in these countries and then all of the items are shipped together to ireland before being delivered.
> In most cases, however, postal services still charge each other less than they would charge their own citizens for moving a package across the country.
Very likely, it costs them less. Own citizens don’t drop their packages at cargo hubs, already sorted and payed for by wire transfer. Pickup, sorting and processing payments have costs.
Actually, with DHL in Germany, that’s exactly what many people do. The cheapest version is paying by wire and getting the code to put on the package via their website, and dropping the parcel at a package hub, the second cheapest version s paying by wire and getting the code to put on the package via their website, then dropping off at a DHL store, the third cheapest version is getting it stamped and dropping it off at a DHL store, and the most expensive option (about 20$ more per parcel!) is getting it picked up by the delivery guy.
Which is why DHL can offer prices such as 4€ for a cross-Europe 1kg 30x30x60 package.
Now this is boring. People keep complaining about the fact that China's cheap stuff is flooding the US market. How about exporting some expensive US made stuff to China to close the gap of trading?
Oh, you can't. Chinese living in China are not even allowed to buy Intel Xeon Phi cards, export license is required to safeguard your nation.
Maybe make the US short term visa more accessible to Chinese tourists so they can spend more cash in the US?
Oh, you can't. tens of millions Chinese with science/engineering degrees will have to go through the mantis check managed by FBI to make sure they won't steal your nuke techs when visiting the casinos in Vegas. It can take up to several years to get a US tourist visa.
And that’s why millions of chinese tourists every year are all across europe, buying everything they can get.
Especially affected by this are cities known for quality products, for example Solingen, the city where most of modern high quality knives and scissors are from, is overran by chinese tourists.
And the other thing you mentioned also works here – we simply export lots of automation robots to China, e.g. Foxconn just made a deal with a German automation company to replace over 400'000 workers with robots.
Just to prove that your argument is not just valid, but actually proven in reality.
Aren't we finding Chinese nationals snooping around fields to steal seed technology? Or being the (if not second to Russia) largest force behind computer intrusion to American corporations, for the purposes of stealing intellectual property?
New Yorker here. No they won't. These policies end up with me having to fly to Hong Kong to oversee a Hong Kong team that deals with clients who got tired, over the past 15 years, with flying to the United States.
This is another example of WaPo's overly sensational piece. To be fair, USPS loses BILLIONS on retirement funding, reduced mailing due to the dominance of Internet age with emails and other competitions. [1] $79 million in fiscal year 2013 loss due to this type of shipments is a drop in the bucket comparing to the mishaps in operations and reduced volumes at $3B/quarter in 2011.
To be fair, the USPS is only "losing billions" on retirement funding due to the pre-funding obligations imposed by Section 8909a of the Postal Accountability and Enhancement Act of 2006, not obligations owed to current employees or retirees. [0]
There was some speculation at the time that this was a regulatory attempt to "tie their hands" on investments to address the online shopping market, which has more than offset the decline in carriage due to email. For example, during the 10 year period covered by the pre-funding obligation, UPS managed to increase revenues on domestic shipping by ~45%. [1]
Excluding these mandatory payments, the USPS is actually slightly profitable, to the tune of (conservatively) $92M as of 2015 [2]. In this context, a $79M loss is a major portion of their annual profits, although still a drop in the bucket compared to their gross revenue.
This is a global phenomenon by the way. European postal services have the same 'problem'. The way international postal agreements work mean that China's postal system is effectively being subsidised by the postal services in (at least) the US and the EU¹.
Interestingly, this volume of shipping offers chances as well for (former) national postal services. In the Netherlands the privatised former national postal service is partnering with AliBaba to deliver goods in as little as two weeks from China to your (Dutch) doorstep (currently three to four weeks is common).
I've ordered very small camera accessory stuff on Ebay that arrived from China.
I could never understand how they would be able to manufacture, package, ship this across half the world for less what I pay on postage to send my tax returns to IRS.
Your competitive advantage is that you can deliver the same product within a more predictable window. Getting something from China by surface can take 7 days to 8 weeks. If you use USPS service domestically, you get quasi-tracking with a shorter delivery window of 1 to 3 days (usually).
When you buy from a US seller, you're buying time.
A typical ePacket is about 7 to 14 days from shipment, while first class mail is generally about 3 days from shipment. China Post is worse, anywhere from 30 to 60 days is common. Yanwen economic mail is similar, as are the litany of other carriers used to exploit shipping restrictions on batteries and other items.
Is it a great model? Maybe not, especially for more expensive items. But for low cost, low value items shipped only via china post, there will always be a US based box-shifter willing to collect that 20% premium on time.
I see this with many auctions which are direct from China. Incredibly low auction prices and similar shipping. Do a search for antique Chinese porcelain and sort by lowest ship/price. You will find many items starting at one cent.
I have won a few at a dollar or lower and always received the item. so I have to assume there is no real ship cost to the sender. even the packaging if done here would cost more than what I have paid; usually custom styrofoam that perfectly encloses the item but just remove tape and it opens.
Considering their dollar a package deal with Amazon for last mile I figure they have many ways to lose money
> “But when people buy direct from China that’s adding nothing to the American economy.”
Wait a minute... This argument doesn't make any sense. The post office is delivering to a US citizen that supports said postal services through paying taxes. If they choose to purchase from China, Amazon, or eBay that is their choice.
Maybe people who are not citizens and have not paid any taxes benefit from this but I suspect those are extreme edge cases.
Yes, they are indicated in the Constitution, and they must service each and every little town, and they must go to Congress to gain approval for rate increases, but they are not supported by any tax revenue.
This is not true, but a common debunked claim from the postal union. The postal service gets $18 billion per year in tax benefits including exemption from property taxes and vehicle registrations as well as below-market borrowing costs.
Yes, I was mistaken. Thank you for the clarification.
In a way, that makes the original complaint even more ridiculous because it is literally a business transaction between two private entities and a private intermediary.
I simply don't buy from Chinese sellers on ebay. I sort by location distance and then work my way through that list or lowest price and skip china entries. I am not waiting 3-6 weeks for something just to save $2. Lets be honest, something that cheap, isn't even worth shipping back if its broken ( and most of the time they will just ship another ).
This isn't an obvious conclusion; what if a public service yearly loses a certain amount of money, in order for the public to save twice as much? This is a reasonable interpretation of this case, which would make the isolated loss advantageous in the big picture. Of course, this is a separate concept from seller losing jobs.
To me this sounds an amazing deal. 78M a year is not a lot of money on a federal yearly scale. It's pocket change, in fact. The savings to everyone who orders anything is quite big so it seems like a fantastic investment.
USPS revenue yearly is over 70 billion aka a thousand times more. Their problem is the six billion accrual of unpaid mandatory retiree health payments. 80M is irrevelant.
Why do some people write the dollar sign after the number? Similarly, why do some people write the percent sign before the number? I initially thought it might be a locale thing (like swapping commas and decimal points), but I've seen a lot of Americans doing it too.
> Why do some people write the dollar sign after the number?
For foreigners, that's easy, that's how you write currencies in other languages.
For American doing it, I guess it is just a typing artefact. You think "ten dollars", you write "10$", there is no autocorrect for that kind of things so you let is slide.
As a matter of principle, yes. It's a redistribution of wealth from everyone to a select few (in this case, people who need iPhone cables). The least fortunate will not always be the greatest beneficiaries of the subsidy.
> It's a redistribution of wealth from everyone to a select few (in this case, people who need iPhone cables)
Surely you're joking and I'm bad at picking up on satire.
First, this particular scenario is exactly the other way around! By not doing this, every single consumer pays a lot more than they otherwise would so that this one guy's obsolete middle-man business model is protected. Why the hell should we all be chipping in to insulate his comfy middle class lifestyle from global markets? Especially when his business model already depends on offshoring manufacturing jobs anyways... protecting this guy's job is an extremely weird place to draw the line in the sand!
Second, this case is particularly egregious. I literally don't know a single tax payer who doesn't need iPhone or USB-C cables. And a lot of non-tax payers even have a smartphone.
A smartphone is the single greatest expense for many extremely poor people, who use their second hand phones to apply for jobs, keep in contact with family, google homework questions, as a calculator, find services, etc.
> The least fortunate will not always be the greatest beneficiaries of the subsidy.
Anecdata time.
There's an on-and-off homeless guy in our neighborhood who has a phone he uses to find places to eat/sleep, apply for jobs (getting to a physical location across the city is expensive -- better to apply online), find bus routes to job interviews, and make small change doing surveys/selling good stuff he finds on the curb during university move-out/finding random yard work on Craigslist/etc. And also, of course, for free entertainment. He doesn't even have a data plan -- he bums wifi off the local coffee shop. A smartphone is a computer that he can conceal and keep close to his chest when sleeping in the park or a shelter.
Thousands of homeless folk definitely benefit from cheap iPhone/USB cables, from cheap smartphones, etc.
In principle I agree that subsidies don't always benefit the worst off. In this case, they do however, since the downward price pressure is mainly on low priced, lower quality segment consumer goods.
You could make the argument that while the costs of the goods are now lower and consumer surplus goes to most americans, they're out-competing US made products, that would generate wages for the worst off. Then you'd be arguing for protectionism though.
Nice case of peering agreements in the real world!
(Of course these peering agreements come from a postal union treaty rather that individual 1:1 agreements among private parties, but really they are the same thing).
The number of routes is small enough that there's no need for postal BGP :-)
It's the vast majority of mail and keeps the USPS in business. I guess we could ban it and jack the price of stamps way up, but I have a feeling that would be unpopular.
We should follow the lead of Sweden, Germany, Japan, and Great Britain and begin to privatize the US postal service.
There is no need for the Federal Government to control pricing, delivery, or market entry for postal services.
> The USPS inspector general’s office estimated that the USPS lost $79 million in fiscal year 2013 delivering this foreign treaty mail.
$79M is governmental chickenfeed, given how much this service improves the quality of life of its citizens. For perspective, it's moderately less than the cost of one (1) F35.
You're right that $79M is basically nothing when it comes to government spending as a whole, but the USPS doesn't get support from federal taxes - they have to generate enough revenue to pay their own expenses.
The government has already been trying to do everything they can to run the USPS into the ground, something needs to be done about these treaty deliveries or a continual increase in volume is going to harm the postal service (I don't know what that something looks like, maybe make the federal government pay the cost difference for these treaty deliveries since the postal service is required to deliver them).
I don't actually disagree, but comparing this to the biggest military procurement boondoggle in US history seems like setting a somewhat low bar.
That said - again, you're quite right that we're getting a lot more for our money spent with USPS. Surely there have to be less expensive and more worthwhile ways, than the F-35 project, to run a jobs program!
Not to mention, they are required to prefund pensions for their employees, something no other entity is required to do. They also are required to take a letter from anywhere in the country, and deliver it to anywhere else in the country, within a couple days, for less than 50 cents.
The USPS' profit margin is aggressively controlled by Congress, which makes sense considering that they're a Constitutionally mandated monopoly. However, it also means the Republicans can inflict their "starve the beast" strategy on it at will.
"Economists regard seigniorage as a form of inflation tax, redistributing real resources to the currency issuer. Issuing new currency, rather than collecting taxes paid out of the existing money stock, is then considered in effect a tax that falls on those who hold the existing currency.[4] Inflation of the money supply in the long run may cause—and, all other things being equal, will cause—a general rise in prices due to the reduced purchasing power of the currency."
The problem is the amount. Going by this page[1], there's a net production of less than 30 million dollars per day. Let's round up to 11 billion per year. The M2 estimate[2] of US money supply is 13495 billion dollars. That's a seigniorage tax of less than a tenth of a percent per year. It's also less than a tenth of a percent of US GDP alone.
I understand the seller's frustration - their means of supporting themselves has been taken away, but I'm not sure I buy the argument that we need the intermediary just to "add to the economy". To me it just seems like an unsustainable business model that was destined to die once global communication became much easier, not just because of the various treaties and agreements of postal services.
The moment that chinese sellers could get a site available to a global audience, the need for an intermediary vanished; before you essentially paid for the connection; an extra $18 on a remote controlled toy boat was paying for access to the seller's inventory, supplied by his Chinese connections.
Now, there's no need for that connection or that warehouse - the visibility for any foreign seller is much greater, even to the point that it probably would still be valuable even without the USPS trade deal.
It's unfortunate, but this just seems like a model that was destined to die.