Walking Through a Shopping Mall …Market Research For Chinese Factories

In china business, usa by Michael Michelini4 Comments

Man….its hard to shop in America after spending four years in China! Everything I look at I try to calculate the manufacturer’s price and landed cost!

One of the things some of my friends and business colleagues in China asked me to do was to go to a shopping mall in America, snap photos of products along with price tags, and let them analyze it to see how much stores are marking up products they manufacture.

I thought it would be a good blog post, and I like this kind of research project. While taking photos in various mall shopping centers, I was asked to stop taking photos, that photographs are not allowed in their store. Hey, while America is a free country, these are private stores and they have a right to set policies on their property.

Felt like a spy. So I would snap my last photo in that shop and move on. I tried to get various shops of products from clothing to products.

You know, its always easier said then done….

Chinese factories think Americans just buy and sell for a quick profit…..

while ….on the other side…..

Americans cannot understand how the Chinese factory can so easily misunderstand their email or order instructions.

I moved to China just because I thought it was soooo easy, how can they keep mis-understanding me?

I have been in China talking to factories for years, and when they quote prices, they sometimes think they can look at the retail price to calculate their manufactured price.

And many Chinese factories think all the American buyer does is buy their products and put it on the internet or put it in a store marked up 4 times and sit back to collect the money….so they try to maximize their profit….hey, you can’t blame them…

Lately, I’m gaining the perspective more on the Chinese side, as you know I have been working with Chinese factories and ecommerce businesses to analyze how they can sell in the Western world.

Many have tried themselves, some realize it is a completely different ball game, and want an expert.

I have also heard from many online sellers who sell fake products and think that its not fair these “big bad brands” in USA and Europe can exploit there workers and buy for $1usd and sell for $80usd

Let me talk neutrally on both sides….

A store, you see the prices – I remember since being a kid listening to my dad talk about how cheap X product is to make and that this store is crazy to add so much profit to it.

But there is tons in the middle of the factory to the retail store…sure the internet is reducing the amount of “middlemen” in the process, I’m not going to use today’s blog to go into the supply chain between China and USA, but I will show some products that I saw in the American malls with my best guess how much they cost to manufacture.

Clothing – Actually this is cheaper to buy in America, for the same quality / brand. At the mall today in Florida, there were tons of Asian and European shoppers, buying luggage just to carry the clothing out of the mall! I believe this is because of low import taxes and volumes of goods America is buying from overseas…driving the price down. China has a high tax on its consumer goods that many people don’t factor into. Girls in China beg me to buy Levis jeans for them, since its sooo much cheaper in America.

Electronics – Again, cheaper in USA. *** I have talked about buying iPhones and selling in China…. this is because of Chinese taxes….and also because Americans buy sooo many consumer electronics that containers and containers of electronics are shipped from China to USA every day that the turnover and volume is so high, pushing profit margins so low….that America is the marketplace to BUY electronics.

Plastic “stuff” gadgets – This I believe is mostly cheaper in China…..not exactly sure why, maybe because there isn’t much brand recognition on it, but in stores in USA the prices are much higher then I can get it for in a Chinese store….maybe also because Wal Mart is in China….maybe Chinese tax is lower, but definitely I would buy injection mould plastic products in China directly to save a decent amount of money. Maybe also the shipping cost per unit is higher.

Gift / Novelty – this stuff is highly marked up….why? Because it is not as “high volume” as clothing and electronics, so it is probably going to have to sit on the store shelf or warehouse longer. Plus people are less selective about price when shopping for a gift or a joke for a friend, or coworker, etc. They see it at a shop, they laugh, they buy. This includes Spencers Gifts stores, Hot Topic, and Halloween shops.

Another thing to keep in mind is – WILLINGNESS TO PAY – this means that customers don’t buy something based on how much it costs to make, but instead on how much they think its worth, and how much VALUE it is to them.

People pay more for a brand because they TRUST that brand. They know that they are less likely to waste their time with a product that will break or get slow, noisy over time.

Its also IMAGE, what images does the brand give you – when you wear it, do you connect with a certain “group of people” like sports players (Nike), sailors / crew (Nautica), and a cause…a community of people who buy those products you are connecting with. Apple is a perfect example, Steve Jobs marketed it as “think different”, be a unique, rebel consumer and pay way more for a product with a better experience….and don’t conform and settle to evil Microsoft or IBM.

I have the below photos of products found in New York, Connecticut, and Florida shopping malls….got kicked out of some for a few of these, so enjoy.

Maybe in the future can take video! Podcast is coming once I’m back to China!

  • The plastics you buy in the US tend to be a better quality and weight than the stuff you buy in Asia, from imitation Legos to ice cube trays to bins for storing clothes.  We’ve never really liked most of the brittle plastic crap we’ve seen available locally in Asia at a cheaper price.  Far too disposable after easily breaking.

  • Jovy Navarro

    Indeed plastics in China are much cheaper, but I agree with penguinsix, some plastics coming from China(if not all) are somewhat sub-standard, but some are good also. Careful when buying plastic stuffs in China though, here in the Philippines they always found some plastic Chinese-made stuffs high in lead, and unfortunately most of those stuffs are toys.

    Great blog you got here by the way!  I think this is my 3rd visit already 🙂 Keep it up!

  • thanks Jovy for your comment – glad you’re enjoying the blog!

    Yes true – I use my friend’s QC company intouch-quality.com and he can take care of all of that, as well as my buddy Andy at STR for lab testing.

    plastic can be tricky….but that is a major material Chinese factories use and have advantages in.

  • true Andrew……

    I guess I’m used to just using them almost as disposable, haha, since i’m always on the move anyway