Chinese companies have the cheapest products
But what looks like a good deal at firstWill cost you a lot more in the end
Welcome to China Uncensored, I’m Chris Chappell. If you were one of the over 100 million people to
tune into the Superbowl this year, you may have seen this ad.
It’s for an ecommerce site called Temu. And if you’ve never heard of it and you’re wondering how
it can afford millions of dollars to buy seconds of airtime during the Superbowl, you’re not alone.
How could something be so big without me ever hearing about it until now? This is just like
when I found out about Olivia Rodrigo last week. Is my finger that far off the pulse?
A lot of people have been wondering the same thing about Temu.
And why they thought a girl buying ugly wigs for bald guys was a selling point.
Also, if you’re buying a wig that’s under 10 bucks, it’s for sure made from
possum hair. Hope that wig comes with rabies shots.
I’m not sure if that or the Addams Family-style shoes
walking themselves down the stairs was weirder.
I have to say though, it kind of represents the company. Their
tagline is “shop like a billionaire” and if you see their website, you’ll know why.
It’s got a lot of strangely cheap and weird stuff on it. With just $20,
you could buy a pair of shoes, a 32-in-1 screwdriver set,
wireless earbuds,
5 pairs of socks,
and whatever this thing is.
Best $20 investment ever. If this is how billionaires shop, that explains why
they’re all so weird.
“You wanted this cute round cat pillow? Well here you go.”
And what the heck is this? If you gave it to your crush they
wouldn’t know if this was flirting or a threat.
Temu is in fact a real company that was founded last year in the US,
although its parent company, PDD Holdings, is Chinese.
It also owns popular Chinese ecommerce site Pinduoduo, which has been around since 2015.
Temu claims on its website it uses a consumer-to-manufacturer model,
which is where consumers come up with an idea and get a company to make it for them.
I’m not going to get too much into their business model here, but let me know if you want us to do
an episode on how Chinese ecommerce sites work. Or if you’d like us to do an episode on what
kind of sociopath would actually buy this creepy cat harassing instrument.
Temu claims that it has suppliers from all around the world, buuuuut
“Temu is selling a lot of consumer-targeted goods that for two decades have been made in China...
The difference is that those items used to be sold by companies like Walmart and Target.”
It seems pretty clear that with all Pinduoduo’s contacts in China,
most of the sellers are from China.
Truly shocked a more reputable distributor isn’t behind this nightmare fuel.
Temu isn’t just Pinduoduo trying to dip its feet into the American market though. It’s
trying to take out American companies like Amazon and Walmart in the process.
Temu reportedly already has more downloads of its app than either Walmart of Amazon
which doesn’t bode well, considering it’s only been
in existence for about 5 months at this point. And I know some of you might be thinking, “Wait,
are you trying to make me feel bad for Walmart and Amazon?” I know they’re terrible. But this would
be like being happy that the bear traps in your town were removed… and replaced with landmines.
This isn’t just another story of a tech startup disrupting an industry though. When
Chinese companies enter a market, it’s not to compete on equal ground and win through merit.
They use a slash and burn approach to business that allows them to take over whole markets,
thanks to a number of illegal government subsidies and shady business practices.
I’ll explain more, after the break. Welcome back.
If you’re wondering how Chinese e-commerce sites like JD.com, Alibaba,
and PinDuoDuo can sell stuff so cheap, it’s because they’re not playing on an even field.
Most products made in China are cheap because —
besides the obvious —
the Chinese government is giving them a leg up. For example, China doesn’t let the value of
its currency rise and fall naturally. This means the yuan stays artificially
low so that things made in China can be sold at lower prices in other countries.
This is great for Chinese companies’ profits. But over the last couple decades,
it has wiped out other countries' manufacturing
to the point where consumers all over the world are now dependent on China.
Which is like saying, “Yeah, these landmines aren’t great,
but at least they’re cheaper than all those bear traps!”
Another way China keeps costs down is through low-cost labor. Sometimes, free labor!
China’s re-education through labor system forces prisoners to make things for little or no pay,
and those goods are being shipped around the world.
Which sounds bad. But thank goodness all Chinese prisoners deserve to be there and
aren’t just being punished for no good reason. Boy, that would be evil, right?
We know China is using prison labor because back in 2012, an SOS note from a prisoner in
China made headlines when a woman in Oregon found it in her Halloween decorations.
It said, “If you want to see something really scary, you should see how they’re treating us.”
OK, that’s not what the note actually said. But my advice to all you enslaved
Chinese dissents out there is, when you risk your life to write a
desperate note for help in not your native language, at least try to make it funny.
The US government has tried to ban products made with forced labor,
mostly from the Xinjiang region where the Chinese Communist
Party has been persecuting people from the Uyghur ethnic minority.
“Beijing's central planners pay companies in Eastern China to open factories in
Xinjiang and train Uyghur workers. And the Xinjiang local government gets paid to build
factories near Uyghur detention camps. AMY LEHR: I actually interviewed a number
of former detainees who were put to work. Their communications were monitored. They were
paid in a year what they should have been paid in a month.”
So Western companies that pay their workers *any* sort of decent wage are going to have a hard time
competing with China’s slave labor. Do you know how evil you have to be
to make the way Amazon treats its employees seem saintly by comparison?
“Their drivers have to pee in Gatorade bottles? So what? At least they can afford to buy Gatorade!”
The same goes for the environment. Well-enforced environmental regulations make it costly to
pollute, and that drives up manufacturing costs for companies in the US and Europe.
China has lots of environmental laws on its books, but they’re often not enforced.
That’s how almost 60% of China’s groundwater became polluted.
And how the air around Beijing can look like this.Beijing residents are looking at how the
people near the toxic trainwreck in East Palestine, Ohio are reacting and thinking,
“First time?”
Whatever the Chinese Communist Party may say about wanting to be carbon neutral by 2060,
they’re actually only concerned with generating low-cost power,
which is why China is still building coal plants.Another way the CCP makes it harder
to compete with Chinese companies is through subsidies. The government has been known
to give subsidies for things like energy and land in industries it wants to boost.
“When China identified steel as a strategic industry in the early 2000s,
its government ramped up steel production with massive subsidies.
Total energy subsidies to Chinese steel from 2000 to mid-2007 reached $27.1 billion,
and that conservative estimate may just be the tip of the iceberg.”
China flooded the international market with cheap steel, making it hard for other countries
to stand up against them. Figuratively, And literally. Man, that’s some cheap steel.
As a result, a lot of American manufacturers went out of business—to the point that the
US government called it a national security issue.
China’s steel dumping violated World Trade Organization rules. So the US slapped
China with anti-dumping and anti-subsidy tariffs.
Which China can afford, on account of all that money they’re saving by not paying their workers.
Another advantage China has is that, instead of doing its own research and development,
which takes a lot of money, it just steals technology from other countries.
The US alone loses hundreds of billions of dollars a year to China’s intellectual property theft.
And while some of that goes to advancing things like China’s space program
it’s also used to make cheap knockoffs that drive consumers away from the original products.
You know how annoying it was in college when you put a bunch of time and effort into a project,
then that one group member showed up at the last minute to take credit for everything?
Well, China’s like that, only they’re not in your group. And they use slave labor.
On top of all that, when you order a product on Temu, the cost of postage is artificially low.
The price of shipping a package from China to San Francisco is
lower than shipping it from LA to San Francisco.
That’s due to an agreement with the Universal Postal Union.
You see, China is classified as a developing country. So it enjoys lower postal rates
than developed countries. Which means the US and Europe have to subsidize China’s cheap shipping.
The US Postal Service loses millions of dollars every year to this.
So if you’re wondering why the Post Office is constantly going bankrupt...besides all
the general incompetence, it’s also China’s fault!
So with China’s low-wage labor, poor environmental protections, government
subsidies, theft of intellectual property, and cheap shipping...
it’s really hard for foreign companies to compete with China.
Websites like Temu might seem like a really good deal when you’re getting tons of stuff
for super cheap, but it comes at a huge cost long term—and that cost is destroying other countries’
economies. So yeah… This is a threat.
So what do you think about cheap Chinese products from places like
Temu? Let us know in the comments below and be sure to leave that
like the algorithm so loves. And remember, China Uncensored is
supported mainly by viewers like you. You can support us for as little as a $1 per
episode on the crowdfunding site Patreon Or the exclusive social media site Locals
As a thanks to viewers who support the show, I answer their questions at the
end of each episode. Today’s question comes from kimonryu on Locals, who asks:
How does China take our intellectual property? How do they use it? And I
hope you guys stay on YouTube to spread the word on the CCP. Thanks for being around.
Don’t worry, kimonryu, we’re not planning on going anywhere. So how does China use IP theft?
For many years, the CCP has stolen foreign technology through forcing foreign companies
to form joint ventures with Chinese companies if they wanted access to the Chinese market.
In many cases, this means that the Chinese company gets access
to the foreign company’s trade secrets. This is like someone purposely infecting
themselves with that fungus parasitefrom The Last of Us because, “Think of the profits!”
The CCP also gets trade secrets through industrial espionage,
hacking and administrative approvals.
“If foreign firms refuse to hand over tech secrets, the government will often carry out
police raids of their offices under the pretext of investigating a violation of Chinese law.”
It’s like they saw what Nixon did during Watergate and thought,
“His only mistake was not going far enough!”
So what does China use this IP theft for?
Well, everything.
It could be something as small as selling knockoff Yeezys for 10 bucks on Temu.
Or it could be driving foreign firms to bankruptcy so they can take over the entire industry.
That’s what happened when a Chinese state-owned wind turbine manufacturer,
Sinovel, stole trade secrets from an American company.
Sinovel signed an $800 million contract with the
American company ASMC. But then they stole their technology and refused to pay them.
This case was unusual though in that Sinovel was
actually prosecuted and found guilty in a US court of stealing trade secrets.
But ASMC had already lost a billion dollars in assets and had to lay off 700 employees.
Sure, Sinovel had to pay tens of millions of dollars to ASMC. But in the end,
they’re still in business and they’ve gotten the technology they needed to help China
take over the renewable energy market. So overall, it was still a win for the CCP.
Thanks for your question, kimonryu. And for supporting China Uncensored on Locals.
If you’re not a supporter already, join us on Locals. For a small monthly contribution,
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The link is below. Once again I’m Chris
Chappell, thanks for watching China Uncensored.