China Trade War - Layman's Guide

while do we see some interesting things happening right now with this whole trade war you know we've just had that recent tariff hike and all the threats surrounding it and all the rhetoric and the nonsense from both sides we have to take a reality check here and I'm gonna bring all of you guys up to speed as to how things are and what's going on with all this trade war thing because I don't think people actually understand the whole situation you know having lived in China for such a long time I really found it quite difficult to understand how it is that Chinese companies were able to send small little things like say a few little screws or something to a place like America and pay zero shipping you know if you order off Amazon or something you order a tiny little thing from China and it arrives you know in a week or two but you pay no shipping it didn't make a lot of sense to me because years ago some of you might have noticed I have these t-shirts these silly little t-shirts with Chinese idioms on them that I made I made a whole bunch of them with my friend taro and we decided we'd started a business we thought great we live in China you know this is for many years ago like more than ten years ago probably 11 or 12 years ago so we live in China we can get stuff made cheap because that was what was happening at the time so let's get these t-shirts printed let's make some funny interesting Chinese sayings on them and then let's sell them online you know we can sell them to people overseas and wherever America Australia etcetera etcetera and we thought it'd be a fantastic idea so yes we went and we approached a place we sit down told them to make us a thousand t-shirts I think it was we both clubbed some money together we paid the guys to do the job and we picked up all these boxes and I actually remember I had no car or anything at the time so I had to use a bicycle and balance these things and a little a bicycle and go back and forth about 10 times to get all the stock anyway so there we are sitting with all these t-shirts in our apartment he was my housemate at the time and we thought great let's sell him so we thought we would put them online so I did at that time my youtube channel was only just starting but I kind of put a little advert out and I got a guy you said yeah I'll have why you know and he was in where Canada I think so it's like great there shouldn't be difficult let's just take it down to the post office and let's send it off so we get down to the post office first of all post offices sorry we can't stay in clothing like why can't you send clothing no because it's not like in a professional packaging and apparently at least it was when we tried it's not legal to send secondhand clothing out of China through the post not sure what that's all about but that was the thing so okay that can't send it no problem let's figure out how other companies ship so we looked at all the shipping companies you know your FedEx is your UPS is your various things your China China quite II stuff you know they have their own kind of special Postal Service's so it turned out the cheapest we could send it to Canada for was something like five times what we were charging for the t-shirt itself it was something ridiculous and I can't remember but it around about a hundred US dollars or something to ship a single t-shirt to Canada and I couldn't figure this out how is it that Chinese companies could send things so cheaply and then it turns out that you know all Chinese come look Chinese companies get subsidized by these trade deals with America and various other countries and the government subsidizes them to so to ship things overseas through a Chinese company obviously has to be properly registered with the government and everything costs nothing it's free for them to ship basically and if they do have to pay shipping it's very negligible so they could literally just load up containers worth a crap and send it anywhere in the world for free and I think a lot of people real don't it we'll just don't realize what an unfair advantage that's given China when it comes to trade overseas also the whole tariff thing the way it works for those of you then this is very layman's terms so don't please don't try to give me a lecture in the comments exactly how it works but basically goods that were imported into China they're taxed heavily very very heavily like cars when I went to go buy my car in China I bought a Chinese car because even the cheapest foreign car was something like two hundred percent of the costs that you would pay for it overseas exorbitant and that was all like a luxury tax they have to put on any car that's or any luxury brand so if it's an LV bag or anything he gets a luxury tax gets a foreign tax of some kind in a tariff and all this so you end up you know buying a car that'll sell for say twenty thousand US dollars in America will end up costing eighty thousand US dollars in China and that's how it used to be of course they got caught up in the International Monetary Fund actually told them listen you can't keep doing that so taxes were reduced and so cars did become more reasonable as things went on but you still end up paying for any imported goods a lot more in China than you would in other countries that import the same goods because they make a lot of money out of that by taxing that right however the opposite does does not apply in countries like America they don't put big tariffs on the goods coming in and that's why you make a lot of money you can undercut the market if you can make a cheap pencil sharpener in China and send it over to America and you're not paying any tariffs and you're not paying any shipping it doesn't matter where you are in the world you cannot compete with that because if you try to make a pencil sharpener and send it to America you know you're paying your import duties you're paying your this and that nonsense you know and you're shipping so your pencil sharpener is going to be on the Shelf there for five dollars and the Chinese ones gonna be on there for twenty cents so you see China has had this massive advantage which has allowed the economy to grow in such an amazing exponential way for so long that they've just gotten used to it and it seems like everybody in China has forgotten the fact that all of these sort of measures that were put in place were put in place to help them to help China because the rest of the world doesn't hate China the rest of the world wants to help China in fact part of this whole thing was to try and help China achieve democracy and of course that's a selfish goal of Western powers to try and push democracy on a country that doesn't want to be democratic but that was one of the reasons and of course it results in cheap goods which you know everybody in the West wants cheap goods you want to go and buy a TV like us to next to nothing you you want to go and buy a pencil sharpener that's 20 cents rather than five dollars so it was a win-win situation for a long time but unfortunately it's reached a point now where there's this arrogance that's built up and this forgetfulness of why the Chinese economy has done so well it's kind of like let's put it this way let's just say you're having some friends over right and you want to cook an amazing dinner but you just can't get the ingredients right you know how to cook but you just can't get the the meat and the sources and the so on so a friend of yours goes and travels far gets in his car and drives to all these different places to get you this sauce and to get you that meat and get you this and that he brings it all to your house you cook this amazing meal put it on the table your friends come over the back Wow look at this this fantastic meal that you've made and you sit there and you say yes I did everything myself this meal is all about me I'm amazing and you don't even mention your friend and in fact you you try to push him out of the room don't let him join because you don't want anyone to know that he's the real reason that you got all the ingredients in the first place so there's that whole thing going on in China now where China believes that it's its economic miracle is entirely self done and nobody helped and nothing helped and they've become incredibly arrogant now about this so when America steps in with the president saying he's going to raise the tariffs and stuff they feel incredibly insulted like how dare you it's kind of like the friend who went to get all of the ingredients coming back and saying hey you know can you pay me some gas money because that actually cost me a lot of time and effort and you're like no of course not I did all the work it's kind of what's going on in layman's terms so this has left a kind of a situation where you've got an angry arrogant friend and then you've got a place like Vietnam which they're not angry and arrogant yet maybe there will be in the future but right now they kind of want you to help them get those ingredients because they really want to make an amazing dinner so would you rather keep driving around picking up ingredients to take to your arrogant angry friend would you rather go and pick up ingredients and all this stuff to take to your friendly friend who really wants it and who really wants to help you to is kind of like hey listen could you please get these ingredients for me I will cook dinner I'll invite you over we can all enjoy it together whereas this guy's like go get me the ingredients but you're not invited you know and that's why Vietnam is currently much more attractive then China when it comes to foreign investments because they are more than willing to bend over backwards in order to allow foreign companies to build factories bring business over they're very accommodating and they're not blocked off like China so I hope my strange little analogy layman's terms video has helped a couple of people understand what's going on of course it's far more complicated than it is than what I've stated and you'd be a fool to think it wasn't but the gist of it is is that China's a lot more difficult to deal with angry and arrogant these days whereas places like India and Vietnam are a lot more friendly and open to negotiation and open to doing business and it's just more pleasant to deal with them so what it really boils down to at the end of the day is Vietnam is currently going through what China was going through I'd say about 10 to 15 years ago and so we're going to see the cycle repeat itself and who knows in the future we'll have to do see we'll only be able to know when it comes around but I do feel that Vietnam will probably end up being in a very similar situation as China is at the moment the only difference is that Vietnam has a bit more of a history with the West it's a little bit smaller loan it's probably not going to end up being as restrictive as Chinese at the moment anyway until next time guys I hope you learned something I hope you get inspired to come and travel to these different countries that I've been lucky enough to to experience throughout my lifetime and I'll see you in the next video so until next time you know the drill as always stay awesome don't forget every single Friday right over here you can take a look at another serpent's at a video wednesday lao 86 over on his channel and of course the most important one ADV china every single monday 1:00 p.m. Eastern Standard Time

Channel: serpentza

Views: 415,267

Rating: 4.4651027 out of 5

Keywords: Trade war explained, trade war news, trade war China vs USA, Trade war latest news, Trade war 2019, China, US News, Donald Trump, Xi Jinping, World News, China Tariffs, Politics, Trade, Stock Market, money, economy, US tariffs, President Trump, Tariffs, China Trade War, ADVChina, Laowhy86, US Trade War, breaking news, business news, trade war, china how it is, winston sterzel, life in china, Vietnam, Chinese economy, china gdp, living in china, china (country), serpentza

Id: c1BLtYGyffc

Length: 10min 44sec (644 seconds)

Published: Fri May 17 2019