Why is Alibaba So Cheap?
There are several reasons for “made in China” cheap goods. For one thing, in the 1990s China imported 60 percent of components to make goods “made in China”. Now, component imports are only around 35 percent. Due to this reduction, China was able to reduce the price of their manufactured goods to a much cheaper price.
In general, China is known for its low cost shipping. The average shipping cost in China is only Rmb13 (approx. $ 1.90). Meanwhile in the United States, the average shipping cost is $ 5 to $ 10. Since 2012 China has overtaken America to become the country with the largest logistics market in the world. Since 2011, the growth of China’s logistics world has crept up to 50 percent each year.
The low cost of shipping is clearly beneficial, especially for the e-commerce industry players. Jack Ma, founder of Alibaba, once said that the real magic of Chinese e-commerce lies in the efficient cost of logistics.
There are 600 districts in China that have “same-day” and “next-day” shipping options. A thing that is rarely done in other countries.
The strength of China’s logistics world is supported by strengthening infrastructure. Today, China has 230 airports and high-speed trains. Strengthening this infrastructure allows China’s e-commerce to run fast while capturing the hearts of customers. In 2016, China’s Bereau State Post noted that 31.3 billion parcels were delivered successfully, 80 percent of which came from online shopping.
Apart from the matter of infrastructure, China also has policies that favor the world of export trade so that their goods go global. The policy is a tax rebate. The policy, which began in April 1985, would simply reimburse those who imported goods from China.
