(Fgv 2007) The great mystery about these copycat c
(Fgv 2007)
The great mystery about these copycat cars is their price. Chinese counterfeiters obviously save on research and development costs, but they still have to buy steel and other materials at market prices. Most of them make cars in very small volumes, so there are no economies of scale.
That they can sell these cars for half the price of the originals suggests that something odd is going on. They either do not know their own costs (a distinct possibility), have revolutionized car making (highly unlikely) or are being subsidized in some way. For the time being, no one knows.
Counterfeit cars in China - The sincerest form of flattery SHANGHAI "The Economist" - Apr 4th 2007
According to the text:
Materials are no cheaper in China than elsewhere.
Price wars in China have brought down the price of cars.
There is no mystery as to why cars made in China are so cheap: the Chinese are more efficient than the rest of the World.
In China counterfeiters do a great deal of research and development.
Economies of scale help explain lower prices in China.
