Page 176 - A Banker Down the Rabbit Hole

51. The might of "Made in China"

Item costing one Hong Kong Dollar selling for one US
Dollar at 700% margin
Our customers were dealing in mostly cheap goods importing from China,
Taiwan and Korea and exporting to South America, UAE, Spain, Caribbean
islands and many countries of North Africa. The margins were huge as
any imported item costing HKD 1, was invoiced at US$ 1 while exporting.
One US$ was pegged at HKD 7.8 as per fixed exchange rate mechanism
followed by Hong Kong then. The exporting companies at Hong Kong
became very rich due to trade in Chinese goods.

Even today, we go to any showroom or shop for any item; we find the
Chinese variety of all items available at a much cheaper price and better
looking quality. China started liberalization of economy in 1972, about
20 years before India did in 1992. China is still maintaining a lead of 20
years and India has not been able to catch up to their level of mass
manufacturing innovations, processes and standards. In a democratic
country like India there will be several issues like land acquisition etc.
that can prove to be a hindrance. Such issues did not impede the fast
progress of Chinese manufacturing push in totalitarian regime of China.

Made in India push by Indian Government is yet to take any concrete shape
even after more than two years of its announcement. There are issues that
are extremely indigenous to India and hence any progress will be possible
only if we tailor strategies customized and fitted to the Indian Scenario.

Insights from the episode
Don't underestimate the might of "the dragon" and the "Made in China"
goods in international trade.
— z —

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