Recently, I began working on a project for Uni. As part of my mechatronics degree, I have to design and build a thing that makes use of both mechanical and electrical components. Unfortunately, I have to order all the different bits myself, with my own money. Sigh. So much for my FairGo Slots fun…
Anyway, I began researching what would be the most cost effective way to buy the various parts I needed. For instance, I need an Arduino Uno (a programable control board that can act as a brain for my project). So I started checking various websites to see what prices I could get it. I knew off the bat that Ali Express would be the cheapest, but I decided to check other websites and options anyway because if I could have the option to pay a little more for faster shipping time, it could be worth it.
In my country, everything that’s imported has to be handled through an official importer. Checking with them, the price comes out from anywhere between 30 to 75 dollars for just the Arduino. On Amazon, with shipping included, the price comes out to around 30 to 40 dollars. On Ali Express, a mere 10.
It got me thinking- why the drastic difference in price? In Ali Express is capable of undercutting the market so effectively, why aren’t other companies lowering their prices to stay competitive? Does China’s slave labor really affect the prices that much (well yeah, obviously. When you have no moral qualm with children working for pennies and prisoners working for nothing, that really reduces expenses, don’t ya think?)
However, aside from the horrendous labor conditions in China, it has ANOTHER major advantage over western businesses that I didn’t know about until I decided to look into it: Terminal Dues.
In this day in age, the idea of junk being shipped across the globe is so commonplace we all but take it for granted. In Covid, when interpersonal interactions suddenly became taboo, many panicked near do wells, retreated into their homes, and lived entirely through shipped products ordered via the internet. However, the backbone of the international postal system is labyrinthine in its complexity.
Here’s how (a part of) it works. International shipping rates are set by an international body called the Universal Postage Union. The organization was established by the Treaty of Bern in 1874(!) and is now a branch of the United Nations.
Before this body, individual countries would have to set up Postal Treaties with one another individually. This isn’t so bad in and of itself, but it can get awfully confusing when multiple countries (or oceans) separate the two signatory countries.
For instance, in 1853, the United States had a postal treaty with Prussia. Germany, however, preferred to send its US-bound mail through France. Since France and the US did NOT have a postal treaty at the time, the mail had to be forwarded again to England or Belgium, who would then send it across the Atlantic.
Well, it gave everyone involved headaches, I assure you. So, after dealing with Napoleon, Germany began reorganizing its regulations, among them postage. To standardize a new system and, quote, “bring order to the system of international mail” (and if you did not read that in a thick German accent, read it again), German Postmaster General Heinrich Von Stephan called for an International Postal Conference, in 1874.
The delegates agreed to Stephan’s proposals and signed the new Treaty of Bern, which established the General Postal Union. This organization standardized shipping practices, international handling of mail, postage, etc. This is the organization that eventually evolved into the Universal Postage Union (or UPU for short).
Initially, part of the agreement was that countries would handle different legs of delivery for free if it was small enough (like a letter). A letter from Germany would be delivered to the United States by the German Postal service, and then the rest of the journey would be handled by USPS.
They couldn’t have made them sound any more ominous, huh? Well, all that goodwill couldn’t last forever, apparently. The treaty was updated back in 1969 to add “Terminal Dues”, which tacked on small fees to each mail piece. The idea was to solve imbalanced mail situations, where one country mailed a lot to another country- but not the opposite, meaning that one country’s postal service was handling far more mail than the others.
The UPU devised the terminal dues to sort out this problem and level the playing field economically between countries. Still, thank goodness most shipping companies handle all that for us upfront.
China, however, doesn’t have to worry about most- if not all-of these dues and fees. Why? It’s thanks to the United States’ ingenious solution to the fact that USPS loses money every year. The mail service doesn’t make a profit? The government’s solution: Get more stuff shipped in from China!
In 2010, the US instituted the ePackets program. It’s a shipping service that used to be just between China, Hong Kong, and the US but now includes dozens of countries. The ePackets program, combined with the fact that China is labeled a “group 3 country” by the UPU (whereas the US is a “group 1 country”) means that China pays dirt cheap prices on international shipping.
And it’s a one way street.
Trying to ship stuff to China from the US doesn’t afford you the same prices. It’s one way. And you know what? Despite the fact that mail from China has more than tripled since ePackets were implemented, USPS is losing MILLIONS now to it.
To compensate, USPS now makes up that difference by charging YOU more domestically. It’s also the reason why getting stuff shipped from the other side of the planet to your house can end up being cheaper than just sending it to a neighboring city. Thanks Obama.
In an article on PracticaleCommerce, Paul Steidler (senior member of the Lexington Institute), talked about a mug company he spoke with back in 2017. “I spoke recently with a US company that sells mugs. It costs them $6.20 to mail the product to a different town in the United States.
But a US consumer can purchase the entire counterfeit product, with shipping, for less than $6.00 from China (with the shipping only being $1.00 of the component) through the ePacket program.”
Problems and Solutions
I think the problem here is fairly obvious. Aside from the fact that China is already at a massive competitive advantage already in relation to the US (slave labor, remember?), US and western businesses get double screwed by the shipping.
“But!” Supporters of this policy cry, “The policy benefits the public good by allowing US consumers to purchase cheap products from China, which outweighs the importance of protecting filthy, money-grubbing merchants!”
Ah, but you forget one thing: That’s stupid.
First and foremost, all you’re doing is allowing Chinese junk to be better available to the American market instead of Americans buying cheap(er) American products. Of course, I suppose that only matters if you believe that supporting American / western businesses is better than supporting Chinese ones. After all, businesses are businesses, right?
I say no. Every business in China is partially owned by the Chinese Communist Party. Every product you purchase flows right to the CCPs various projects, which include but are not limited to:
- The Uhyger Genocide that’s actively happening right now.
- Funding Russia’s invasion of Ukraine.
- Stealing Western Intellectual Property like there’s no tomorrow.
- Eventually invading Taiwan.
- Production of Military helmets that can remotely self-destruct at the commander’s whim. Why? To “prevent technological leakage” and “maintain the dignity of [a captured soldier]”.
- The entire Covid-19 Pandemic (whether you believe it came from a lab or not).
- The continuing subjugation of the citizens of Hong Kong.
As a wise man from Hong Kong once said, “Donald Trump don’t trust China, China is Asshoooole!”
In other words, yeah, if possible, I would rather spend my money anywhere else than with China. There is no reason that China should have such a decisive advantage in the Western Market. We’ve seen during the pandemic that at the slightest disruption from shipping, the entire western hemisphere gets affected.
There are electronic chip shortages that still haven’t caught up with the demand, and China made bank off medical supplies manufactured for the rest of the world- because we trust China with MEDICAL EQUIPMENT for some unfathomable reason!
The solution is simple, in concept: Even the playing field. That can be done in a number of ways, like tariffs. Just tax everything imported from China. Ideally, the UPU would also change its tune, but that’s less likely (because the UN is, as always, a useless institution).
Internally, however, America can still set its own terms. By leveling the playing field, American businesses and manufacturing would be capable of growing, which would then wean the west’s dependency on China. That’s vital because if China ever decides to go to war (say with Taiwan), and the US wants to be on the other side of that war, China could kill the American economy with a penstroke.
And China knows this.