The Chinese Have Begun!

General bike chat that does not fit elsewhere
Flasher
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Re: The Chinese Have Begun!

Postby Flasher » Sun Jan 13, 2013 23:34 pm

The price of goods have never been related to how much it costs to manufacture. Some of you are incredibly naive!

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calmx5
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Re: The Chinese Have Begun!

Postby calmx5 » Sun Jan 13, 2013 23:37 pm

Starting this thread feels like walking into a bar, starting a sizeable bar fight, and walking out without a single scratch, leaving everyone still bickering.

nickyboy zz
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Re: The Chinese Have Begun!

Postby nickyboy zz » Mon Jan 14, 2013 10:09 am

boogi11 wrote:Cycling really does take the pi$$ when it come to the price of the gear, no item costs anywhere near £60 to make , more like £7. Leg warmers 30. Shoes 70(cheapest I could find) shirts 40, jersey 40, gloves 30, helmet 40, it's so expensive, and it does not wear that we'll.


You're forgetting VAT and the retailer's margin. Your £70 shoes include £12 VAT so net revenue is £58. The retailer has to pay his staff, run his shop (if he's not just online), manage his warehouse, finance his working capital and make a profit. Typical high street retailers operate at a margin in excess of 40% (so a £100 incl VAT product they will buy for about £50). Obviously online retailers can manage a lower margin as they dont' have a physical shop to pay for.

And this is for normal high volume stuff like high street shoes and clothes. When you enter more specialist areas (with lower stock turn and more stock obsolescence problems) the margins are higher. So don't be surprised if your £70 shoes cost the retailer about £27. Work this back to the manufacturer, the transport, packaging, wholesaler etc etc and you can see where the £70 goes. If you ever run a retail business you would see how difficult it is to make a profit, despite the seemingly sky high margins you would enjoy

nickyboy zz
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Re: The Chinese Have Begun!

Postby nickyboy zz » Mon Jan 14, 2013 10:16 am

pinarello001 wrote:Dyson is a good example of mark up. Initially held up as a great innovator, winning all sorts of industrial design prizes and waxing lyrical about British manufacturing and creativity. Then he moved his production to the far east despite being highly profitable in the UK.
There will come a point in China where people will expect higher wages and higher living standards and I anticipate the government yielding to some extent to keep the people happy (A nation of 2 billion must be hard to govern).
The resultant effect of higher wages etc will be that one day in the not too far distant future they will be on a par with the West in terms of profitability vs wage rates. Resources are still relativley cheap for them because they don't care where or how they get them from or what despot they support (Re.: West Africa, Angola, Botswana, Sudan etc etc). Eventually those resources will dry up.
We have the current problem that we are addicted to cheap goods and that habit is supporting ecomomies with poor wage rates, v poor working conditions and little or no care for the environment.


Wage inflation in coastal regions of China is typically 7-9% at the moment. There is significant unrest as basic items such as food and clothing are increasing more quickly than this so the government tries to manage the prices of these staples but it is ultimately fighting against the tide. China will convert into a South Korea type economy over time. All that means is that the cheap manufacturing moves. T Shirts are no longer made in S China, they are in Vietnam, Cambodia etc. Low value added manufacturing is no longer in coastal China, it is moving inland to cheaper regions.

There is plenty of mileage still left in cheap Asian goods, don't expect your counterfeits to increase in price much in the near future

BTW, if you're going to comment on China, at least get the population right. It is 1.3billion

boogi11
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Re: The Chinese Have Begun!

Postby boogi11 » Mon Jan 14, 2013 10:18 am

i still dont agree, just think about it for a minute, you can but a new racer for £299, think of the components in that product, and then the amount components in a bib and jersey for £149. which is hardest to assemble and ship, a bike with 60 components , weighing 6kg, or a jersey made of 3 materials that will fit in an envelope,
i agree there should be a premium for the better quality products, but why does a semi decent pair shorts cost £50, its crazy

joe.90
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Re: The Chinese Have Begun!

Postby joe.90 » Mon Jan 14, 2013 10:26 am

pinarello001 wrote:So long as the Chinky winks keep poaching Ivory, Tigers, Rhino horn etc etc, I am loathed to buy anything Chinese out of sheer principle.


this has to be the most stupid thing ive heard in a while.

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thegreatdivide
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Re: The Chinese Have Begun!

Postby thegreatdivide » Mon Jan 14, 2013 10:28 am

boogi11 wrote:i still dont agree, just think about it for a minute, you can but a new racer for £299, think of the components in that product, and then the amount components in a bib and jersey for £149. which is hardest to assemble and ship, a bike with 60 components , weighing 6kg, or a jersey made of 3 materials that will fit in an envelope,
i agree there should be a premium for the better quality products, but why does a semi decent pair shorts cost £50, its crazy


For £299?
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nickyboy zz
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Re: The Chinese Have Begun!

Postby nickyboy zz » Mon Jan 14, 2013 10:54 am

boogi11 wrote:i still dont agree, just think about it for a minute, you can but a new racer for £299, think of the components in that product, and then the amount components in a bib and jersey for £149. which is hardest to assemble and ship, a bike with 60 components , weighing 6kg, or a jersey made of 3 materials that will fit in an envelope,
i agree there should be a premium for the better quality products, but why does a semi decent pair shorts cost £50, its crazy


Here we get to the nub of it. Take a Triban from Decathlon. Decathlon source directly from Far East so can manage their supplier very carefully. This produces savings that help support the price. However, I suspect the big decision they took was to take a big hit on retail margins on this to get volume "proper" bike sales. They know that nobody just buys the bike, they buy clothing, lights, helmets etc etc. Once the customer is in the shop buying the Triban, it is an extremely easy upsell opportunity

The alternative biz model is to sell the fancy top at £140, take a hefty margin on it (I estimated this a few posts back) and accept that their customer might only buy this and nothing else

Whilst Decathlon bikes and fancy cycling tops are both cycling related, in reality they come at the customer from completely different ends of the spectrum so you can't really compare them

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thegreatdivide
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Re: The Chinese Have Begun!

Postby thegreatdivide » Mon Jan 14, 2013 11:19 am

I'll say it again...a 6kg bike for £299? Bollax!
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nickyboy zz
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Re: The Chinese Have Begun!

Postby nickyboy zz » Mon Jan 14, 2013 11:36 am

thegreatdivide wrote:I'll say it again...a 6kg bike for £299? Bollax!


That's not the poster's issue. Whether it is 6kg or 6kg doesn't matter. What he wanted to know was how could you sell a road bike for £299 but a fancy cycling top is £140. Hopefully I answered that earlier

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thegreatdivide
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Re: The Chinese Have Begun!

Postby thegreatdivide » Mon Jan 14, 2013 12:05 pm

nickyboy zz wrote:
thegreatdivide wrote:I'll say it again...a 6kg bike for £299? Bollax!


That's not the poster's issue. Whether it is 6kg or 6kg doesn't matter. What he wanted to know was how could you sell a road bike for £299 but a fancy cycling top is £140. Hopefully I answered that earlier


My point is it's not accurate.

A Triban, if this is the example we're using here, weighs at least 11kg (real world weight) and it's made of low end materials and fitted with basic components (no offence Triban owners) so it’s cheap to make and there will be zero R&D in its design.

For a pair of £140 bibs there’s a lot of R&D via things like pro rider tests and top end materials from places like Moa and Cytec. Even if the components are put together in China or Turkey the fabric itself can be/will be sourced from somewhere else. Cyclist magazine did a really good feature in one of their first issue on this very subject.

I’m not being naive about the fact that these companies are out to make money, but Rapha, Castelli and Assos don’t just go onto a Chinese website and order up a few bits of material and slap on £130 mark up.
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diy
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Re: The Chinese Have Begun!

Postby diy » Mon Jan 14, 2013 12:28 pm

I think I'd be more likely to buy one if they took the team/sky logo's off. The more blinged up you and your bike are the more you'll stand out when you are the slow coach puffing and panting on the climb.

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bernithebiker
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Re: The Chinese Have Begun!

Postby bernithebiker » Mon Jan 14, 2013 12:37 pm

thegreatdivide wrote:I’m not being naive about the fact that these companies are out to make money, but Rapha, Castelli and Assos don’t just go onto a Chinese website and order up a few bits of material and slap on £130 mark up.


I would argue that's exactly what they do. Just how much design can you put into a cycle jersey anyway? It's a polyester T-shirt with a zip.

(For a jersey, mark up could be 20 to 120£, IMO)
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nickyboy zz
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Re: The Chinese Have Begun!

Postby nickyboy zz » Mon Jan 14, 2013 12:46 pm

thegreatdivide wrote:
nickyboy zz wrote:
thegreatdivide wrote:I'll say it again...a 6kg bike for £299? Bollax!


That's not the poster's issue. Whether it is 6kg or 6kg doesn't matter. What he wanted to know was how could you sell a road bike for £299 but a fancy cycling top is £140. Hopefully I answered that earlier


My point is it's not accurate.

A Triban, if this is the example we're using here, weighs at least 11kg (real world weight) and it's made of low end materials and fitted with basic components (no offence Triban owners) so it’s cheap to make and there will be zero R&D in its design.

For a pair of £140 bibs there’s a lot of R&D via things like pro rider tests and top end materials from places like Moa and Cytec. Even if the components are put together in China or Turkey the fabric itself can be/will be sourced from somewhere else. Cyclist magazine did a really good feature in one of their first issue on this very subject.

I’m not being naive about the fact that these companies are out to make money, but Rapha, Castelli and Assos don’t just go onto a Chinese website and order up a few bits of material and slap on £130 mark up.


Have a read of my earlier post where I broke down the £140 using my sourcing experience and, admittedly, some guesswork. I would be amazed if the margin on a £140 top was less than £90. I agree that that has to go towards their other costs such as testing and R&D but, all the same, it's a lot of margin to be charging

Now if you have some alternative figures to counter mine then show the breakdown please

paultheparaglider
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Re: The Chinese Have Begun!

Postby paultheparaglider » Mon Jan 14, 2013 13:09 pm

pinarello001 wrote:
Froomes Edgar wrote:
pinarello001 wrote:So long as the Chinky winks keep poaching Ivory, Tigers, Rhino horn etc etc, I am loathed to buy anything Chinese out of sheer principle.


Good thinking there. Luckily out of ~60 million British people not ONE has ever done anything morally questionable, so idiots in other countries can't possibly tar all of us with the same brush and refuse to buy British goods. Phew.


The world has moved on since the days of the empire - not that I have any shame whatsoever for the fact that we had the biggest empire. Moral relativism is flawed by the way - it was acceptable then, it may not be acceptable now.
So just because we (the British) have had some questionable morals does that mean to say we have to ignore the carnage wreaked currently by the slitty eyed immoral ba$tards from Chinky land?



I wonder if pinarello001 will feature on the follow up documentary to this one?

http://www.channel4.com/programmes/dont ... cebook/4od

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diy
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Re: The Chinese Have Begun!

Postby diy » Mon Jan 14, 2013 13:14 pm

There will be marketing and license costs. Perfume for example would be very high margin without these.

nickyboy zz
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Re: The Chinese Have Begun!

Postby nickyboy zz » Mon Jan 14, 2013 13:32 pm

diy wrote:There will be marketing and license costs. Perfume for example would be very high margin without these.


Correct. Quantify please. Without numbers (which I have been happy to provide) it's just conjecture

Perfume is an interesting example. The reality is (although some may disagree) that perfumes are fundamentally the same, regardless of the selling price. They are alcohol, fragrances, a bottle and some packaging. What you're buying, when you buy a £50 bottle of perfume is about £2 of "product" and £48 of marketing. People buy it not because it is a fundamentally better perfume, they buy it cos it makes them feel nice and they like the idea of people knowing they have an expensive perfume (otherwise why have distinctive bottles?)

Not so different from cycling tops after all.......

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thegreatdivide
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Re: The Chinese Have Begun!

Postby thegreatdivide » Mon Jan 14, 2013 13:54 pm

bernithebiker wrote:
thegreatdivide wrote:I’m not being naive about the fact that these companies are out to make money, but Rapha, Castelli and Assos don’t just go onto a Chinese website and order up a few bits of material and slap on £130 mark up.


I would argue that's exactly what they do. Just how much design can you put into a cycle jersey anyway? It's a polyester T-shirt with a zip.

(For a jersey, mark up could be 20 to 120£, IMO)


Then I'm sorry but you're completely wrong. If you put a Garmin Monton special next to a genuine Garmin Castelli Aero you’d see that the quality of the latter is leagues ahead of the ‘one ride and you smell like a tramps ar$e’ sweatshop bargain. The latter will also fit properly.
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thegreatdivide
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Re: The Chinese Have Begun!

Postby thegreatdivide » Mon Jan 14, 2013 13:58 pm

Knocking up Rapha bibs in China...or not

http://www.rapha.cc/moa-sport
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bernithebiker
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Re: The Chinese Have Begun!

Postby bernithebiker » Mon Jan 14, 2013 14:07 pm

thegreatdivide wrote:
bernithebiker wrote:
thegreatdivide wrote:I’m not being naive about the fact that these companies are out to make money, but Rapha, Castelli and Assos don’t just go onto a Chinese website and order up a few bits of material and slap on £130 mark up.


I would argue that's exactly what they do. Just how much design can you put into a cycle jersey anyway? It's a polyester T-shirt with a zip.

(For a jersey, mark up could be 20 to 120£, IMO)


Then I'm sorry but you're completely wrong. If you put a Garmin Monton special next to a genuine Garmin Castelli Aero you’d see that the quality of the latter is leagues ahead of the ‘one ride and you smell like a tramps ar$e’ sweatshop bargain. The latter will also fit properly.


Unless you have access to Castelli/Rapha's accounts, I don't see how you can proclaim that 'I am completely wrong'.

Clearly these companies have a lot of advertising to pay for, which means you pay for it. The almost certainly also have several execs on very nice salaries thank you very much, which you are also paying for.

The Chinese Cervelo rip off jersey I bought for about £10 or £15 not only fits me very nicely, it appears to be of the exact same material as all my other more expensive tops. It's lasted 3 years fine so far.

I will buy Castelli, etc. stuff but only if it's heavily discounted.
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