Trade Resources Trade Tips Why People Do Not Like Imports: a Guide in Importing From China

Why People Do Not Like Imports: a Guide in Importing From China

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Chinese import has been a center of debate for all sorts of reasons. It is a threat or opportunity depending solely on how you view it. There are numerous protest groups which will advocate banning import from China, citing reasons from product safety to unemployment. All these issues are real but to decide to import or not, require pragmatic thinking.

We import because it is cheaper to produce in another country than our own. Manufacturing is always done at places where total cost of production (rent, labor etc.) is cheapest unless some other factors such as government policy, public view etc. prevents it. Another reason for imports could be monopoly of physical resources, technology or patent rights that a country enjoys over other.

As of year 2011, top three exporters to USA were China followed by Canada and Mexico. What is more interesting to note is that the imports from Canada and Mexico combined, is about one and a half of the total imports from China. So, why to have so much discontent and apathy against importing from China?

The most common answer you will hear is that cheap imports from China take away domestic jobs. Let us ask ourselves a question: What type of jobs? Blue collar factory worker’s job. The reason is simple that USA and other industrialized nations are shifting from manufacturing to service economy which makes citizens more productive. In the past 50 years, there has been gradual shift from manufacturing to service. Today, only 1 in 7 people are employed in factory work as oppose to 85% in service industry. Economists will find similarity in this situation with industrial revolution 200 years back when farmer or artisans cribbed about jobs taken away by factories. Currently a fraction of work force is employed in farming which feeds entire nation. So when there is change people who can not adapt to change do not like it. However change is inevitable because as country becomes richer (rise in per capita income) skill premium rises.

Source: http://how-to-import-from-china.com/
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