China’s Protectionist Policy
Almost all internet retailers will, at some point, have to deal with a Chinese manufacturer. In corresponding with a trading company in Hong Kong recently I learned something interesting about China - they heavily tax imports (17% VAT) and basically do nothing with exports - I always thought that our import duties were expensive here in the US - I guess I shouldn’t complain.What really bothers me, though, is that this VAT (value added tax) is levied even if products are being sent back into China because they are faulty. So if a Chinese supplier sends you $100K worth of merchandise (their cost) and you have to return $50K of it you will lose an additional $8,500 at the border. Good luck getting a Chinese manufacturer to pay it.That’s how China’s protectionist policy can hurt me, but it is also detrimental to Chinese citizens. China has one of the fastest growing economies in the world right now and potentially the largest. Eventually China won’t be an impoverished nation - they will continue to be a commercial powerhouse and wages will go up. At that point if they cannot freely trade with lower-wage countries they will have to live with economic inefficiencies that will keep their standard of living artificially low.Governments should promote free trade and stay out of the picture as much as they can - I recognize that some grading, quality control, safety precautions may have to be imposed by the government, but in the long run non-essential protectionist trade policies will only hurt the citizens they are designed to help.
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