"Only $4 of an iPod that costs $150 to produce is made in China" | Hacker News Reader

"Only $4 of an iPod that costs $150 to produce is made in China"

online.wsj.com

22 pointscwan9 comments

I don't understand it: why would the intermediate goods not be accounted for? Some stuff goes into a country, some stuff goes out of a country. The difference in value is probably what people are looking for? Why should it matter if the goods are "intermediate" or not?

Stockpiles, I guess. In the lead-up to the GFC, manufacturers reduced stockpiles, which cut intermediate exports down. But finished goods didn't fall as much.

Intermediate goods aren't accounted for because it's complicated and difficult to figure out.

It matters because it misrepresents the trade deficit, which is a sensitive political issue. As the article points out, the real U.S. trade deficit with China may actually be 30% lower while the trade deficit with Japan may actually be 25% higher.

This could be a case where the SourceMap project could provide useful info. e.g. http://www.sourcemap.org/object/ipod

For total exports and imports to a country, it makes no difference. For country/country pairs, it changes things. For example, a big chunk of the US trade deficit with China should be reassigned to Japan.

A Japanese chassis, Japanese lens, Japanese gasket, Japanese CPU, Japanese receiver, Japanese software, and Japanese keyboard in a Chinese paper box is a Chinese cell phone when it is convenient for it to be one. My neighbors got quite literally burned in effigy in the 1980s for making American manufacturers look bad (I live in the region that generates the lion's share of Japan's electronic components and automobile parts). They learned the lesson: don't be seen as making Americans look bad.

There is a Japanese proverb you may have heard of called "The nail that sticks up gets hammered down." There are a few ways to spin it, but they all suggest not being that nail. Making China be that nail instead? That's like triple bonus points. (China and Japan have a... storied relationship with each other.)

It's hard to know the origin of exported goods.

Let's say your country exports wood, and you have imported screws. If you export furniture, do you assume it is built using screws, and measure the country's added value by subtracting the value of the screws from the value of the furniture? Or maybe you believe it is glued, but actually uses screws - now you have overvalued.

And what if you import another, more expensive kind of screw from Japan, which looks identical but has different properties? Do you know which ones are being exported, and therefore what value the country is actually adding? And to think this is only a simple example!

You bought screws for 1000$ and exported wood for 2000$ - so your "trade delta" is 1000$. I don't see what is complicated about it.

Unless you are interested in seeing the delta per country you trade with. But what use is that number?

The previous WSJ article about that study:

http://www.nytimes.com/2007/06/28/business/worldbusiness/28s...

$73 of the $299 price was a Japanese hard drive. $80 went to Apple in America.

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