This is absolutely a good idea. Whoever thought it would be advantageous for packages from China to cost less to ship than equivalent packages within the USA, is beyond me.
I hope there are positive economic and environmental results from this move.
What will be the unintended consequences I wonder?
It made sense when they were truly a developing country. But the issue is that entire businesses have been built on top of exploiting these rates. For example, a few years back I bought several specialized antenna cables for $2-3 online (total price, including shipping) and assumed they must be surplus some warehouse was trying to unload here in the U.S. and they'd just drop them in domestic First Class mail. I couldn't believe it when they arrived several weeks later from China and when I asked the post office what it would cost me to ship that exact package back to the sender they quoted me ~$30 (which of course didn't include the cost of the actual contents.) Good luck competing with that.
That's not just subsidies, but also how trade routes have been optimized. China, the US and every other country, have non-symmetric mail dispatch systems, optimized for the China->wherever route, with mass dispatch from China branching out to everywhere else. The reverse wherever->China is how much shipments cost over non-optimized routes around the world.
Stopping the subsidies won't stop the differences in volume and optimization (but it can be argued that subsidies no longer make any sense).
I'm sure I am missing something, but surely every container ship that leaves china with a huge pile of mail has to return again to collect more - can't they just take stuff with them?
I don't know anything specific, but a few things come to mind.
First, it's not necessarily the case that these ships are traveling in direct A → B → A... routes, they could be going from China to the US to South America then back to China, carrying some proportion of finished goods and raw materials along each leg.
Second, having to fill up the containers with something at the origin, and unload all that something at the destination, are both huge logistics efforts to manage. Not at all 'free'.
Is a good question, and I don't have an informed answer, but I wonder the same. Maybe the ships leave the US full of exports bound for other destinations in a global "round robin" style route or something along those lines? Or perhaps it's just much faster without the added mass? Would love to hear more about this from someone informed on the topic.
Yup. I figure that anything I need to return / repair has at least $40-50 in overhead. The current shipping situation amplifies however good/bad the deal you got was.
What will be the unintended consequences I wonder?
Small businesses who use dropshipping direct from Chinese companies will stop being able to compete with big businesses who buy in bulk and ship from US warehouses. This will benefit the likes of Amazon more than anyone else.
Not sure if that's an unintended consequence though.
>This will benefit the likes of Amazon more than anyone else.
A _huge_ chunk of Amazon is low effort Chinese clone / drop shipped crap or straight up forgery. I don't feel sorry for /r/entrepreneur denizens' loss.
It will help the kind of small business with core competencies revolving around producing things and hurt the kind of small business with core competencies revolving around buying things on Alibaba and selling them on Amazon.
People who actually wanted to do things well often couldn't even afford to ship their product for the entire price of product + shipping for lots of dropshipped things under the old ways. I'm happy that the class of business that monetizes outdated shipping policy are going away.
You think intermediaries (e.g. dropshippers) can't add value to a supply chain? I don't know why you'd be so uncaring about /r/entrepreneurs when these are generally just people trying to get by as best they can. Having said that, this treaty withdrawal is still a good idea.
You think intermediaries (e.g. dropshippers)
can't add value to a supply chain?
These days, don't Chinese companies mostly list the products on Ebay and Amazon themselves? Just today I ordered something on Ebay and got a paypal receipt for my payment to 覃尚田.
I don't see what value an extra intermediary adds in that situation?
Dropshippers add range and access to market segments the manufacturer, or wholesellers, cannot ofer. These dropshippers are able to go after small customers with low order volumes. So they indirectly add value by increasing revenue.
they also cut out other middlemen like wholesellers and brick-and-mortar retailers. Done well, and at scale, this could be one of the more serious thrats for Amazon in the future.
> These days, don't Chinese companies mostly list the products on Ebay and Amazon themselves?
Yes, it's pretty standard to find the same company with store-fronts on AliExpress, Ebay and Amazon. It's sometimes worth checking for differences in prices though due to lag in updating each catalogue.
Absolutely intermediaries in supply chains can add value.
can being the operative word. Amazon, New Egg, WalMart et al. opening themselves up to a certain sort of very low effort intermediaries sucks quality out of their platforms and makes online shopping a minefield of avoiding knockoffs (sometimes with Amazon impossible, to the extent where there are certain things you just shouldn't buy) and fake or paid-for reviews.
Fixing artificially low shipping won't kill this sort of behavior but it will make it easier and more profitable to compete against.
If they provide some level of stocking and quality control, they can. Dropshippers arbitrating between amazon and aliexpress don't really provide much of that.
What about insurance brokers? Or travel brokers? They don't have stock. Intermediaries (sort of) inherently create quality control via having a better perspective on the market than any single supplier can, and through pressuring individual suppliers via their own large-scale buying/selling activities.
E.g. if a dropshipper is selling mobile phone covers at scale, and stops using supplier x because the poor quality is affecting the dropshipper's brand, this puts more pressure on the supplier than if individual end-users stopped buying their products. Same applies to all brokers. They glean great power over suppliers in this fashion, while improving the experience for end-users (prime example: Amazon).
That isn't what happens though. Quality control with foreign suppliers is very difficult. A bad supplier with a bad name will disappear and come back with a new name. The shops are small and there are an enormous amount of them so there is very little what you might call reputation capital. Find people with experience sourcing products in China and get them to tell you stories.
Nobody forbids /r/entrepreneur denizens to go to China and open his own dropship outfit there. And in fact, many of them did. You will be surprised that all those aliexpress stores that have product description in perfect Russian, German, and French are shops ran by Russian citizens in China, mostly elderly women.
The things you see on Amazon are bought by the container-load from China and sent to Amazon's warehouses for fulfilment. This change will encourage that sort of business because it'll no longer be worthwhile sending direct from China (as the likes of dx.com and aliexpress do now).
While Amazon won't tell us, I think you are incorrect. A huge fraction of the cheap clone items you see listed are not in Amazon warehouses but are shipped direct from China. Fully half of my Amazon purchases over the past year have been direct shipped from China, to the point where now I check Alibaba first before purchasing something from Amazon if the item is unimportant enough that I don't care about the risk of getting a cheap counterfeit.
AliExpress is doing that too. I'm in Spain, and I literally just received an SMS for a shipment from "SINOTRANS" which is what AliExpress uses to ship in bulk from China then fulfill locally.
Aliexpress is the consumer-facing side of Alibaba, which is the 5th largest internet company by revenue. The fact they're doing this isn't at all surprising.
I'm low income for where I live and buy a lot of basic $1-$5 clothes from China that would be $20-$30 equivalent in USA. This is going to hurt me directly. It's not like I'm buying food, housing, electricity from China, but having good quality fashionable clothes for very cheap when I can't afford anything except Goodwill here is beneficial for professionalism at my job, and overall satisfaction about myself.
Trump should focus on putting more money in our pockets rather than making things more expensive and hoping the pipe dream of any manufacturing is coming back to US is a reality.
Subsidies? No, it's called free trade and efficient shipping. If I'm buying clothes anywhere else and it says made in China (most), I'm probably supporting child labor. I'm skipping the retailer charging $12 for the same thing I get for $1.88. What kind of country do I live in where I'm not allowed to dress cheap but well to go to work? What the absolute f*?
I walk to work, so I don't want to subsidize your commute or travel by roads, and I don't fly often so I'd rather not subsidize the FAA as well.
That 90% discount is because your/our tax dollars make it cheaper for China to ship here than for a business like the one you work at or might get a job at or even start in the future to ship to China or other countries.
I agree that we shouldn't pretend that we can make everything domestically--but we also cannot allow our economy and basic goods--by virtue of subsidies, no less--to atrophy while we become dependent on the parasitic influence of the PRC. China is not a free country, they are a aggressive totalitarian regime and it is a shame that the US will soon be 100% dependent on them for every good we buy.
It made sense when it was just mail (ie information) getting shuffled around, saving both sides from having to negotiate the other end in a foreign currency/language. But since e-commerce landed and it became real trade, being subsidized is suddenly a far greater issue
> Whoever thought it would be advantageous for packages from China to cost less to ship than equivalent packages within the USA, is beyond me.
As a consumer I think it's advantageous. I'd much prefer to pay no shipping when compared to paying significant amounts for shipping, regardless of where the package originates.
This kinda reminds me of the conversation I had with my brother in law regarding the likes of SingAir, Emirates, and Qatar and just how much better they are when compared to US carriers that charge more on the same route despite providing an inferior product comparatively. He started on about how those air carriers are government subsidised, it's not fair, and I shouldn't be flying with them because of that. I told him I didn't care about the underlying business model, I want new aircraft, well trained staff, good quality food as well as service. Every one of those government subsidised carriers over deliver on every one of those metrics when compared to their US equivalents.
Sure, some people will take a stand because they feel the need to do so. But in general I don't believe most people care how their goods and services are subsidised, only that they believe they've received a better deal when compared to similar offerings from other providers.
Those airlines don't provide a better product for a lower cost, they are selling you a higher-end product and billing part of it to their own citizens. That's what government subsidy means.
Yes, I understand what government subsidies are and how they work. But if I'm not the one subsidising the product then I don't understand how me benefiting from that is a bad thing for me personally.
The US subsidises gasoline quite aggressively when compared to other countries around the world. You can see this in fuel costs; routinely US gasoline used to be cheaper by the gallon than Australian gasoline was by the litre. I've never once heard an American complain that their fuel is too cheap despite the fact that their taxes and government are directly responsible for said low cost.
Our gas is too cheap due to subsidies and/or due to inadequately accounting for the costs of externalities like pollution or wear/tear on roads. Or, more precisely, the lack of political will to acknowledge that discrepancy.
Perhaps not today, but an argument could be made that a whole lot of tax money has been spent over the last several decades to make sure that middle east oil came to the US.
Does the tree that falls in the forest with no one around to hear it, still make a sound?
For the person you’re replying to, it seems clear that the most important thing about the word “cost” is how much they personally pay — third parties are irrelevant.
“Sound”. “Cost”. The meanings of words are not as precisely identical as our subjective feelings tell us.
I call bullshit... They receive $100 million in tax dollars per year to subsidize blind and overseas citizens. They also get $18 billion per year in tax benefits. That is not self-funded by any stretch.
They have a multi-billion dollar loss because the GOP Congress passed legislation requiring them to pre-pay their employee retirement health benefits instead of funding it on a pay-as-you-go basis.
Given that the USPS is a government established and run service, thus backed by the USG in terms of its liabilities, the idea that somehow the USPS is "saving" this health benefit money somewhere is ludicrous.
It's just as stupid as the SS "trust fund" and "lockbox", which is nothing more than a paper shuffle of US treasuries from one drawer in a filing cabinet to another.
Is having the funds to pay for retiree benefits a terrible thing? In CA, most of our pensions for public employees can barely even meet current payments.
I agree about the mess of the social security paper shuffle though
I'm not sure if this will really make a dent in the price gap between Chinese and local goods, and if it doesn't, well, people will still pick the more affordable option. Manufacturing and labor costs are still significantly lower in China in comparison.
As the article states, there are also businesses who rely on these rates for their inventory or materials. Those businesses will also get impacted, and the extra cost will likely be passed down to consumers. Stuff on Amazon might not be so cheap anymore
I hope there are positive economic and environmental results from this move.
What will be the unintended consequences I wonder?