Thursday, January 04, 2007

Designed in California, Made in China

Adam Smith: "Nothing, however, can be more absurd than this whole doctrine of the balance of trade."

Nanos and iPods are "designed by Apple in California, assembled in China."

To those obsessed with the trade balance as a zero-sum scorecard, another imported, $200 Nano merely adds to our growing bilateral trade deficit with China and knocks a few more Americans out of jobs. Wouldn’t we be better off, they ask, if the whole thing were made and assembled at home by American workers?

The answer is a definite no.

As with other high-tech devices, iPods are assembled in China, but the real guts of the device—the brand name, the design, the engineering, the most sophisticated components—come from the United States and other countries outside of China. Like trade in general, importing iPods from China creates a win-win scenario for people in both countries. Assembling the devices is relatively high-paying work in China, so the Chinese workers and their economy do benefit to some extent. But American consumers benefit even more from the deal.

Read more here from Cato Institute's Daniel Griswold.


At 1/04/2007 3:15 AM, Blogger ChinaLawBlog said...

And, if they were not manufactured in China, they would no doubt cost much more and some other (non-US company) would probably step in and take away much market share from Apple, diminishing its profits, which when multiplied out ....

At 1/04/2007 6:52 AM, Anonymous Roland Baker said...

Extremely interesting article. Apple has become a leading company in global benefits. China is able to benefit with jobs and the United States can benefit from monetaries being exchanged to boost her economy.


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