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How much do you think it costs to make a pair of Nike shoes in Asia?

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Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#321

Post by ibeff »

rayiner wrote: post #52
JSR_FDED wrote: post #4

It’s like people excited about the new datacenter being built in their town, think of all the jobs that will bring they cry. Nobody realizes it takes 6 people to run a datacenter. Bringing “manufacturing back to the US” is a fool’s errand. The future of manufacturing is automation, not jobs.

> Bringing “manufacturing back to the US” is a fool’s errand. The future of manufacturing is automation, not jobs. That’s probably correct. But the current trajectory means that China will have the robot-operated factories, not the US. What do you anticipate the US will do to obtain goods from those Chinese factories? Especially when AI stands poised to obsolete a lot of the white collar jobs where the US still retai…

> China will have the robot-operated factories, not the US. What do you anticipate the US will do to obtain goods from those Chinese factories?

Why not let the market take care of it? It's cheaper to buy things from China then make them yourself. When that changes, production will naturally move to the next best place. I don't see the issue.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#322

Post by pbreit »

rayiner wrote: post #42

Americans need to get over their view of “Asia” as being about making shoes. When I was working in engineering in the early aughts, we mocked the Chinese as being able only to copy American technology. Today, China is competitive with or ahead of America in key technology areas, including nuclear power, AI, EVs, and batteries. We need to anticipate a future where China is equal to America on a per capita basis, but f…

These analyses always assume no margin compression which is wrong.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#323

Post by throwaway7783 »

wahern wrote: post #195
pjc50 wrote: post #102

Earlier quoted context omitted.

> US will find itself in the same position the UK is in now The thing is .. there's a point here, but it's not at all tied in with physical products. People are obsessed with one side of the ledger while refusing to see the other. Most of the stuff the UK is struggling with (transport, healthcare, energy) are "state capacity" issues. Things where the state is unavoidably involved and having better, more decisive lead…

> Fishing is less profitable for the whole UK than Warhammer. There are 3x as many fishermen in the UK than employees of Games Workshop, and much more again if you count the number of related fishery jobs. At the end of the day, politicians and voters alike respond more to employment than nominal monetary figures. A broader employment base is generally better for social and political stability than explicit wealth re…

"A broader employment base is generally better for social and political stability than explicit wealth redistribution"

. This is what stops revolutions and civil wars.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#324

Post by gnfedhjmm2 »

phkahler wrote: post #314

I've always wondered why the supply chain has exponential price increase at each step. The example given (guessed at) is the factory produces the shoe for $12.5 and sells it to Nike for $25. Nike then sells it to Footlocker for $50 and they then sell to a customer for $100. Everyone expects to mark up their costs by about 100 percent. Why is that the case? Even if we say the markup isn't 100 percent, why is it a perc…

Because then one unit of thing is theoretically one standard deviation from being profitable. So you can have a break even price.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#325

Post by yibg »

phkahler wrote: post #314

I've always wondered why the supply chain has exponential price increase at each step. The example given (guessed at) is the factory produces the shoe for $12.5 and sells it to Nike for $25. Nike then sells it to Footlocker for $50 and they then sell to a customer for $100. Everyone expects to mark up their costs by about 100 percent. Why is that the case? Even if we say the markup isn't 100 percent, why is it a perc…

The numbers at each step is only considering the marginal cost. There are various overheads that are fixed, some described in the article. And of the day the actual profit at each step isn’t necessarily very high.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#326

Post by swah »

josefresco wrote: post #237
jimt1234 wrote: post #178

Sorta related: Those Crocs/clogs shoes have been extremely popular for a few years now. ... I've always wondered how much it costs to make that type of shoes (Crocs/clogs) - it can't cost more than $1 to make most of them; they're just injection-molded, right?

You can buy Croc knockoffs at the "Dollar Store" yet Crocs still exists. Why? Is it purely first-mover advantage/brand or is there an engineering edge?

I don't know about Crocs but brazilian flip-flops "Havaianas" never lost market share even though it feels so trivial to clone it.

The only two modes of failure of this sandal is "drying up" after a couple years and broken thong straps (yes, 3rd parties sell those as replacements..)

I guess they make sure they have cheap offerings and are always investing in design and marketing so no one can enter this market..

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#327

Post by tweetle_beetle »

dubiousdabbler wrote: post #230
fwip wrote: post #216

Earlier quoted context omitted.

JKR's net worth is less than a billion, which means she's probably not raking in over a billion annually.

Isn't this because she gives so much to charity?

Quoting Wikipedia's source, Forbes estimated her donations were $120 million to date in 2012. However, she co-founded her own charity in 2005, of which she is the president, and I suspect most of it has been donated in that direction.

Personally, I'm always dubious of the rich and famous genuinely finding unmet cases for charitable organisations. Especially when they've made a fortune outsourcing being morally dubious to others - she can save children because others are paying her to be allowed to sell low quality merchandise almost certainly made in exploitative conditions.

She's not alone, there's many more e.g. Messi donating lots to children's cause through his own charitable organisation after gladly being a global ambassador for unhealthy snacks targeted at children.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#328

Post by ReptileMan »

rayiner wrote: post #42

Americans need to get over their view of “Asia” as being about making shoes. When I was working in engineering in the early aughts, we mocked the Chinese as being able only to copy American technology. Today, China is competitive with or ahead of America in key technology areas, including nuclear power, AI, EVs, and batteries. We need to anticipate a future where China is equal to America on a per capita basis, but f…

>What seems most likely to me in the future is that the US will find itself in the same position the UK is in now.

Not quite. USA is big enough to be able to be self sufficient if they keep mexico and Canada tightly bound via NAFTA or military might. UK have no option but to trade. UK was rarely able to feed and fuel itself after the industrial revolution.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#329

Post by boelboel »

lossolo wrote: post #96
bpt3 wrote: post #59

Earlier quoted context omitted.

Their population is declining, and they are a long way away from parity with the west on a per-capita basis. I think China missed their opportunity. Also, the UK hasn't dominated finance for a century and has never been dominant in services, so it doesn't seem like an apt comparison.

The first effects of their population decline will be felt around 2050 by UN estimations. What do you think they’ll be doing for the next 30 years? Considering they already ship more robots than the rest of the world combined, I don't think that will be a huge problem.

No their population decline is felt already, they don't have enough people to fill the factories right now and too many highly educated people. This is mostly about people in non stem related fields and non elite universities. If you're a young chinese with a so-so degree you're basically fucked. The UN estimations are fully off for all countries in the world (look at the actual fertility rates published by countries). If you look at UN you'll see like 1.7 fertility rate for colombia, in reality it's 1.0. All countries are kinda demographically fucked, the US is the one that's doing the best. They have been forging their demographic numbers for years already as well. I'm not saying it looks rosy for the US but it's not great for china either unless you believe in some kinda rapid rise in robotisation in the next 10 years.

Re: How much do you think it costs to make a pair of Nike shoes in Asia?

#330

Post by _diyar »

SoftTalker wrote: post #308
_diyar wrote: post #286

Earlier quoted context omitted.

Because tariffs are calculated based on the value of the good at the time of import, while sales-taxes would be calculated at the end. The article explains the tariff scenario. In the tax scenario, Nike can operate like in the pre-tariff world, while the retailer would have to charge the tax.

But the consumer is still the one who can either afford the shoe or not. He doesn't care who is collecting the tax or where in the pipeline it is assessed.

When in the supply-chain you are creating the "taxation" matters to the final cost, assuming 1) the gross margins remain the same and 2) the costs scale linearly.

Consider a fictional supply-chain with three players A, B, C. Assume that B and C have 50% gross margins.

In a no-tax world, if A sells the product to B for 10$, then B to C for 20$, C will sell it retail for 40$. (A:10$ -> B:20$ -> C:40$)

Now imagine a 100% tariff scenario for the transaction between A and B. Now, A sells the product to B for 20$ (10$ + 100% tariff), then B to C for 40$, C will sell it retail for 80$. (A:20$ -> B:40$ -> C:80$). This nets the government 10$

In a third scenario, imagine a world where this 10$ is not charged as a tariff but as a sales tax. A sells to B for 10$, B to C for 20$, and C to the customers at 50$ (40$ + 10$ freedom tax).

By changing where in the supply chain the tax is levied, we arrive at a lower retail price for the same tax income. This is a natural consequence of the above two assumptions, especially the idea that costs scale linearly. If maximum income from the taxation of imported goods is your goal, this is the way to go. Whether this would have the desired effect of discouraging imports is another matter.

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