Despicable behavior, and unfortunately probably not uncommon. Especially if a corporation owns both ends it can sell a foreign-made product to itself at near or even below cost, jack up the reported cost of American work to that product, and transform it into an American-made product.
Shira's post made no sense until I saw Svnla's post. Now it's all clear. Sucks for the Chinese, but from a long view it makes sense to export your good stuff. Kinda like how Kansas City has the highest grade seafood (because shipping costs the same per pound no matter the grade) or how medieval farmers would sell their white bread (wheat) and eat their black bread (millet or similar lower grade but higher yield grain) to bring in needed cash.
I've been in China for the past 3 months and I can confirm all of the above. It's very interesting but I've also got some other things to add. The entire situation is very complex and has a bunch of socioeconomic + cultural factors. In fact, I don't even know where to begin.
Some foundation (all pretty general and of course there are exceptions):
- China for the past 60 years has been an atheist society, meaning that they don't really have the principles of morality and ethics that other societies have. When Mao took power 60 years ago he more or less abolished religion and told people to rely only on science and reason. Morality suffered tremendously.
- The Chinese has always been very image-conscious. If you really want to hurt a Chinese, shame them in front of everyone. That is more or less the worst punishment for someone. This also means that if no one shames them, they're ok with what they do (unlike us, where we answer to ourselves ie. we "can't live with ourselves" if we do something that violates our moral code). The Chinese can live with themselves just fine as long as they don't lose face in public.
- Mao's recent rule was one of extreme poverty and man-made famine. Family values instilled in people a very strong desire to get the basics, the material stuff, covered, and to earn as much money as possible for one's own family unit and self. Extrapolate this to the current situation and you'll see that people have become very materialistic and centered around money money money. For the self.
- Being very image-conscious also means you strive to follow everybody and at least be on par with others. The Chinese are largely followers and copiers.
- China has one of the biggest income gaps in the world. Everyday millions of poor Chinese see their peers enjoying materialistic goods that they themselves can never ever hope to earn enough money to buy. Cars. Houses. Luxury items. It is rubbed in their faces day in and day out by all the advertisements, luxury storefronts, malls, and actual examples of wealth that their peers have obtained. Because China has so many people, there are a LOT of wealthy people visible every day.
- The Chinese lack long term business acumen. They don't have the concept of serving the customer's needs and the "customer is always right." They are focused on making money NOW. Make the sale NOW. Now now now now now.
- The population is huge which diminishes the sense of knitness and community. In less populated countries each individual is valued more in terms of repeat business and customer relationships. In China this is not the case. You screw someone now and you're probably not going to see them again, which is fine because there so many other people out there and you can also disappear into the crowd if you needed to.
So now you have the fundamentals. Take all of the above and mix them into a big bag and you've got China's results.
A recent history of extreme poverty and atheism begets a society that is very focused on materialistic pursuits with low ethical standards. Combine this with a very image conscious, follow the Jones' culture, with examples of wealth and opulence constantly paraded in front of you and you've got a very large group of people that will do almost anything to obtain said wealth and image status.
Also note that one US dollar buys a lot in China. We say that the Chinese do unethical things just to save a dollar. Well, one US dollar equals 6.2 RMB which can get you a small meal in China. Saving 3 US dollars a day means possibly getting fed 3 times a day. So yes, it's understandable that people will go to greater lengths to save even one dollar, like adding lead to paint.
SO:
Western brands have a good image so the Chinese obviously would like to be seen with western brands.
Western brands are expensive and Chinese people like to be seen with expensive items because it raises their status among their peers.
Western brands also are perceived to have higher quality because of their business standards - ethical standards, product standards, customer service standards.
Chinese brands are thought to be low quality because the Chinese are painfully aware of their own faults that I outlined above.
Chinese-made Western products are ok because they know that the leadership and quality control are still of Western standards. And it's true. For the most part, a Chinese-made western product is WAY better than an equivalent Chinese-made Chinese product. Western companies simply have a much higher standard of quality. Chinese companies say "good enough" (even if good enough only means the outside packaging is good enough to fool a buyer into spending money NOW) while Western companies will shake their heads and say "hell no."
So you see, Chinese companies have a huge public image issue, especially the ones that actually WANT to make high quality products. It's all an uphill battle for them. They could have their stuff manufactured in the US but then they have to convince people that they were indeed made in the US (the Chinese may think they are lying, because many do lie). They could make their products in China with high quality standards but then they have to battle their own service partners' low quality standards AND convince millions of Chinese that even though they're 100% Chinese, they're of good quality, which historically, has been very very rare.
The good thing is that once they get the ball rolling and have a small to medium following, since the Chinese are followers, it's relatively easy to convince even more people. And this is best done by convincing and marketing to the top earners. Once you earn the respect or promotion of the wealthy, the people below will want to follow.
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