Motorcycle Global pricing.

How come it cost more here or less there?

I admit it; I am a geek, but not that interested in why your Big Mac cost more then my Big Mac or less for that matter.


However pricing parity is very interesting to a geek like me, particularly with respects to motorcycles.
Where they are made and where they are sold, the prices at retail and the differences and why.


If it is not taxed to death then below is what the prices would look like, as a percentage around a dollar more(+) or less(-).

Country	Price level (% relative to the US)
India	−63
South Africa	−54
Hong Kong	−50
Ukraine	−47
Egypt	−45
Russia	−45
Taiwan	−42
China	−41
Malaysia	−41
Sri Lanka	−37
Indonesia	−35
Mexico	−34
Philippines	−33
Poland	−33
Saudi Arabia	−33
Thailand	−33
Pakistan	−32
Lithuania	−30
Latvia	−25
UAE	−25
South Korea	−22
Japan	−20
Singapore	−17
Estonia	−16
Czech Republic	−15
Argentina	−13
Hungary	−13
Peru	−11
Israel	−8
Portugal	−8
Britain	−3
New Zealand	−1
Chile	0
United States	0
Costa Rica	1
Greece	3
Austria	5
Netherlands	7
Ireland	8
Spain	9
Turkey	10
Colombia	11
Australia	12
Euro area	12
France	12
Germany	13
Finland	17
Belgium	18
Denmark	19
Italy	20
Canada	24
Uruguay	25
Brazil	29
Switzerland	63
Sweden	75
Norway	80
Venezuela	108

Quote:

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Originally Posted by MJH

How come it cost more here or less there?

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A bajillion reasons, to the bajillionth power.

The basic premise behind pure market economic theory (i.e., where a pricing structure exists) is that all goods and services are priced in perfect equilibrium in all locations. Further, all currency exchanges are simultaneously in perfect balance. This basic premise is behind conventional economic theory, and is most simply exemplified in David Ricardo's theory of Competitive Advantage, the fundamental argument for Free Trade.

Unfortunately, not all people (or societies) are created equally. Further, all societies require taxation (if they want any public goods, such as highways, schools, defence, etc) and some societies require more public goods than others (i.e., the demand for public services is higher in some locations).

Bottom line, though, I sure wish motorcycles were 41% less expensive in China than in the USA. But that is the the fundamental problem with economics ... great in theory, not so great in implementation.

Doc LJH, Piled High & Deep (Finance)

The price of a Harley would never be 41% less then it cost here, unless it was made there. Then it would be a matter of material and manufacturing costs in China. There is nothing that keeps prices grounded other then purchasing behavior. There is no baseline, no break even model, well actually most of the low end production in china is close, actually bet allot of it looses capital. (-) zero (+) as in losses, break-even, profits. The break-even grounds the market. They have that we do not, we subsidize incomes and cost of living.


Its all based on resources, basically raw materials and operating costs, is or are most things half the price.
The middle class is 10-60K, some of them are below the US poverty line, would a person earning 10K per year be comparable to a 20k income in the USA, I suspect that would be yes.

You raise several interesting (and complicated) issues.

Quote:

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Originally Posted by MJH

The price of a Harley would never be 41% less then it cost here, unless it was made there.

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Certainly one would never see that with US companies/products, as the USA has strict anti-dumping legislation (both directions)

I am guessing we will see off-shore Harleys one day (well, maybe not me, but some of you yungins probably will). Many HD components are already Made in China (and Mexico), but final bike assembly is restricted to the USA (and, very recently & to a limited degree, India).

Related story:

I am helping a friend research/buy the new Ducati 795 Monster in Beijing. This particular model is only available inside selected Asian countries (China, Vietnam, Phillipines, Indonesia, India, etc.). It is assembled in Thailand, a country with FTAs with most Asian countries, including China. It does have some components manufactured in Thailand (mainly electronic).

We researched the MSRPs of the 2013 Ducati Monster 795 in some of these countries (ranked lowest to highest, and expressed in Chinese rmb):

India
599,000 Rupees = 58,000 rmb

Thailand
409,900 Baht = 80,000 rmb

Phillipines
570,000 Pesos = 80,000 rmb

Vietnam
350,000 VND = 100,000 rmb

China
119,000 rmb

Malaysia
66,888 Ringgit = 125,000 rmb

Indonesia
225,000,000 Rupiah = 131,000 rmb

The most obvious question she (the potential Chinese buyer) has is ... why is India half the price of China?

The most obvious economist's answer will be "because that is what the market will bare" based on relative incomes (related to PPP). Of course, if you ask an "expert" economist, you will get at least 2 more answers, most certainly including supply/demand, and probably also competitive pricing (although, in China, luxury pricing plays a prominent role).

I was talking to a good friend about something similar recently: car pricing in China, but I'd imagine the same arguments apply with pricing of motorcycles. The apparently inflated pricing of imported, luxury cars in causing a bit of a stir at the moment in social media, the press and with the government. Long story short: even accounting for additional taxes and import duties, imported, luxury cars are still priced significantly higher here in China than they would be in other parts of the world.

Here are a couple of my theories on why manufacturers price things at a premium here in China:

1) The cost of doing business in China is higher than elsewhere in the world. Additional layers of bureaucracy, additional costs serving customers (say for example, perhaps "warranty claims" are for whatever reason, significantly higher here than elsewhere in the world) etc.

2) The risks of doing business in China is higher than elsewhere in the world, and the economic rewards need to be commensurate to those risks for manufacturers to justify opening and running a shop here.

3) What LJH said, because they can. Manufacturers will say that they don't force anyone to buy anything they sell, at whatever price it is they sell them at. So if you don't like the price, don't buy it.

I think no single explanation can account for the inflated pricing we get here in China, but rather a combination of all three of the above (and probably, mostly theory 3) and possibly other theories which I have yet to consider.

As much as I'm a consumer and would happily campaign for more 'reasonable' pricing of "things" here in China, I myself have to accept the fact that in a non-economically Marxist world, the pricing of "things" is dictated by what people are willing to pay for them. And enough people are willing to pay an inflated price for a product, then that will be the price of that product. -End of rant-

Baby food sells in China for ¥39.5, you can purchase them in America for $1.59 = ¥9.75. China is 4X as expensive.

Attachment 13188

We just spent 2 months back in the USA, EVERYTHING in China is now more expensive by a huge magnitude.

Cheers!
ChinaV

Quote:

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Originally Posted by branng

... the pricing of "things" is dictated by what people are willing to pay for them. And enough people are willing to pay an inflated price for a product, then that will be the price of that product.

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So true!

A while back (maybe 8 or 9 years), I was interviewed (as a "foreign expert") by CCTV and a couple of news publications about the price of real estate in Beijing. At that time, it was around 7,000 rmb/sq meter. I took the Western view that, according to countless studies, over the long term Real Estate prices are related to the Affordability Index. I went on and on about the numbers, and the studies, and I ended up suggesting that Beijing real estate prices were likely nearing their peak.

Boy, was I wrong! Given that current Beijing prices are about 60,000 rmb/sq meter (inside the 3rd ring road), I have been relearning "Economics ... with Chinese characteristics." What I failed to realize back then was the virtually endless supply of rich people from other cities that want to move into Beijing - and buy black Audis, etc.

So, today, a typical 100 sq meter apartment costs about $1 million (US), yet the average annual net income in Beijing is about $5,000 (US), although some argue it is closer to $10,000 (US). Either is irrelevant, IMHO, once you do the math.

Quote:

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Originally Posted by ChinaV

We just spent 2 months back in the USA, EVERYTHING in China is now more expensive by a huge magnitude.

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Wow, you are the third person I've heard say the exact same thing this week. Our gone (but not forgotten) TBR experienced the same in his recent trip stateside. Anecdotally, I met a riding buddy for lunch at the Kempinski (about a 4 star hotel in Beijing) and, feeling generous, I offered to pay. Two buffet lunches, one can of coke (48 rmb) ... total was 681 f'n RMB. WTF?!? Good thing I had my credit card with me!

Cost of Living in Guangzhou, China

Prices in Guangzhou

Quote:

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Originally Posted by ChinaV

Baby food sells in China for ¥39.5, you can purchase them in America for $1.59 = ¥9.75. China is 4X as expensive.

Attachment 13188

We just spent 2 months back in the USA, EVERYTHING in China is now more expensive by a huge magnitude.

Cheers!
ChinaV

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Is that imported?

Quote:

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Originally Posted by Lao Jia Hou

So true!

A while back (maybe 8 or 9 years), I was interviewed (as a "foreign expert") by CCTV and a couple of news publications about the price of real estate in Beijing. At that time, it was around 7,000 rmb/sq meter. I took the Western view that, according to countless studies, over the long term Real Estate prices are related to the Affordability Index. I went on and on about the numbers, and the studies, and I ended up suggesting that Beijing real estate prices were likely nearing their peak.

Boy, was I wrong! Given that current Beijing prices are about 60,000 rmb/sq meter (inside the 3rd ring road), I have been relearning "Economics ... with Chinese characteristics." What I failed to realize back then was the virtually endless supply of rich people from other cities that want to move into Beijing - and buy black Audis, etc.

So, today, a typical 100 sq meter apartment costs about $1 million (US), yet the average annual net income in Beijing is about $5,000 (US), although some argue it is closer to $10,000 (US). Either is irrelevant, IMHO, once you do the math.



Wow, you are the third person I've heard say the exact same thing this week. Our gone (but not forgotten) TBR experienced the same in his recent trip stateside. Anecdotally, I met a riding buddy for lunch at the Kempinski (about a 4 star hotel in Beijing) and, feeling generous, I offered to pay. Two buffet lunches, one can of coke (48 rmb) ... total was 681 f'n RMB. WTF?!? Good thing I had my credit card with me!

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This site has is at 25,000 for the median, for rent per Sq meter in the city center.
http://www.numbeo.com/cost-of-living...?country=China

Which is about 4,000 USD or about 400 a sq ft, which the site states is less then the median in NYC, that seems way off isn't it claiming that rent in Beijing is 60% less then in NYC.

I live in Cleveland Ohio and can purchase 29% more in good and services then a person in NYC.
Then compared to Guangzhou my purchasing power is 96% better. Based on a 36K median annual net income, which by the way is not difficult to attain as for most in my circle earn much more then that.


Things are not always as they seem.

Prices change wages change by location, the parity is based on what you can actually buy in a set of goods, each good has its own metrics as for economic factors, that affect its pricing within its sector in its region of the world and related also in that which region it come out of. The sum of all could be seen as infinite, but each certainly has definable limits as in the finite criteria that sets the final prices.


Purchasing behavior is the same as not willing to spend and also part not able to spend.
False prices or inflated retail prices can be very inflationary, people in Brazil are dealing with that today.

Notice the last on the list, its Venezuela, try to find prices on a motorbike there.


Here you have a nation led by man that claimed he would bust the imperialist in the mouth, look close it seems he only managed to fuck up the purchasing power for his nation citizens. .

You are bringing up some good points about relative wealth, but you have to be very careful about using statistics. Many websites provide questionable data, at best.

In terms of city comparisons, expats tend to reference the Mercer Consulting studies, but these are also quite misleading. They are based on living an expat-bubble lifestyle in foreign cities (e.g., Tide liquid detergent is $35 in Beijing versus $7 in Los Angeles ... but locally branded, reputable, liquid detergent is $6 in Beijing).

In terms of real estate prices (purchase / rent), the website you referenced is simply incorrect. A complicated issue, but the key to understanding how "expensive" a city is, is to look at the average incomes in that city. If the city is full of gajillionaires (e.g., Hong Kong), what we mere mortals consider as high prices are nothing more than pocket change to a large number of these super-wealthy people.

Unfortunately, the overwhelming majority of Beijing residents are not super-wealthy. The average Beijing resident has no hope (none, zero, zilch) of being able to buy a home in the city. It is simply impossible because there is a HUGE gap between salaries and house prices. To the average worker in Beijing, it doesn't matter if a house is 10K rmb/sqm or 100K rmb/sqm or a million rmb/sqm ... owning a home is nothing more than a cruel dream (actually, a nightmare). Most agree that this situation has very, very serious social implications (e.g., no home = no wife). It is also why Beijing is often cited as having the most expensive real estate in the world, when taken as a measurement that is relative to an average people's income. (Linkie) The following IMF graph is, I would argue, quite conservative. I think the situation is even worse.

http://s1.ibtimes.com/sites/www.ibti...ive-cities.jpg

In Beijing's motorcycle market, where the typical buyer will be young, and seeking functional transportation (e.g., a scooter), the typical buyer likely has a monthly income around the average of about 2,800 rmb. A 10,000 rmb Suzuki scooter is a full four months of net pay. Want a Jing A plate on that scooter? Add another 40,000 rmb. This scooter will obviously be a HUGE spending decision.

Above these "typical" motorcycle buyers are the "middle income earners" who will not want a motorcycle, but rather a car. That is an entirely different story. Then, above the car buyers are those for whom spending a few hundred thousand rmb on a motorcycle-toy (e.g., a Harley) is, once again, simply pocket change. The HD is just another status accoutrement (e.g., like a Rolex watch).

China's uneven development has resulted in several market distortions, most notably in real estate, but also in many other areas. My usual eat-out lunch costs me 4.5 rmb (which has recently increased from 4 rmb - a >10% increase) for a large, and tasty, donair-style chicken sandwich, and 1 rmb for a bottle of water. If I earned 2,500 rmb/month, my lunch expenditures would be felt by me (assuming 20 working days, that is 5.5*20=110rmb/month). If I earned an expat salary, say $10,000 (US)/month, the <$20/month for lunch is completely meaningless. In the words of Bill Gates ... a Big Mac still tastes the same.

:thumbsup:

:gaah::gaah:

That is what the IMF report states, 30K RMB sq meter , that equates to $4,901 per sq m
China Property Prices
(Thousand RMB/Sq. m., sa,3mma)
http://www.imf.org/external/pubs/ft/...11/cr11192.pdf


This MSN article has it at $400.00 per sq ft. multiply that by 10.76 to convert to sq m and you have $4,304.00 per sq meter.
http://realestate.msn.com/article.as...entid=23375372


Numbeo is not conservative it has the prices at 48K sq m. $7,843.00 per sq meter.
http://www.numbeo.com/cost-of-living...a&city=Beijing




The prices of real-estate in NYC per sq are reportedly as much as two to three times that of Beijing?
All things in parity then the big difference is the ratio, earning much less obviously and paying a much higher percentage of net income per unit of housing


Thanks for pointing that out LJH, however BJ is an outlier, the findings actually do not fly in the face of anything on Numbeo, actually in degrees confirm its numbers. China is paying less not more for consumer goods because if paying 22% of your net income for housing then you are paying less for all others or you would become fiscally insolvent.


As for motorcycle specifically they fall under the need for transportation, they compete with public transit and automobiles. They are not the mode of choice in any nation, but can often be the only option for some, hence the regulations. Your correct not everyone is equal and more then less should stay off two wheels. Feeling compelled to ride and competent are often in common, the desire to ride is a requisite. The need to get someplace is not…with that as the only reason to get on and ride the results can be deadly.


I get bored of people not appreciating the USA and the true quality of life here. Looking at all cost of living as a percentage of income across all levels, hands down this is better then most if not all other nations.


I like equilibriums, balancing points, benchmarks and comparative metrics, I learn from studding them.
It is painful at times, I refer to that the feeling of ignorance leaving, it puts up a fight.


The whole point of any analysis of parity or in parity is ratio based.