Why Chinese Plastic Products are Cheaper

China Tooling: 30-75 Percent Cheaper than the United States

According to a US Government International Trade Commission report, many U.S. toolmakers cite prices from China and Taiwan as being extremely low, ranging from 30-75 percent below prices quoted by U.S. tool manufacturers. (from http://amba.org/AMBA_Uploads/Repengpr.doc)

Interestingly, Titoma offers its customers a product that is cheaper than many available alternatives, yet offers the same quality that Western customers deserve and expect.

How can this be possible?

Extremely Low Labor Costs: The China Advantage

Even though the injection molding industry uses a lot of expensive capital equipment, labor costs are still the largest single component of production costs. China's main cost advantage in mold making comes from savings in this area. Chinese wages for toolmakers are among the lowest in the world; whereas in the US a tool maker easily earns over $40,000 per year, a Chinese tool maker will happily do the same job for US$ 1,000.

The Chinese labor force is also well educated, thus keeping training costs low, and Chinese factories do not have the high healthcare and insurance costs of the US and Europe.

One might also ask, what about higher U.S. labor productivity? It is true that U.S. workers in capital-intensive factories can be several times more productive than their Chinese counterparts. This is because U.S. plants have replaced many factory workers with complex flexible-automation and material-handling systems. This has reduced labor costs but raised the costs of capital and support systems.

Chinese factories reverse this process, however, by taking capital out of the production process and reintroducing a greater role for labor. Parts are designed to be made, handled, and assembled manually. This reduces the total capital required by as much as one-third. So while output per worker may be lower in Chinese factories, the combination of lower wages and less capital typically raises the return on capital above U.S. factory levels.

Low Factory Overhead Costs: A Further Chinese Advantage

Factory overhead costs for many Western injection mold manufacturers are high compared with certain foreign competitors. This is partly the result of firms operating at less than full capacity because of weak business conditions and intense foreign competition. Many Chinese firms operate 24 hours a day, 7 days a week, thus more fully utilizing their expensive machinery and making it relatively less costly (subject to adjustments for power saving schedules).

China Tooling: Cost Savings Give You More Options

A central benefit of Chinese tooling is that it allows the customer to make a profit using high-quality injection molding techniques at lower volumes than would often be required in the West. For example, customers using vacuum formings can often save a great deal of money by switching to China-based injection molding.

Tariffs: Often Not An Issue

When tools are imported to the West, tariffs sometimes apply, but many injection tools and stamping dies are tariff-free. When tariffs do apply, on dies they often range from 2.9% to 5.7% and on molds from zero to 3.8%. EU tariffs are also low (ranging from zero to 5%)