Dollar Daze, Made in China

Dollar Daze: Perhaps you saw the article in today’s NY Times magazine section, “The Buck Shops Here.”A well-written piece, the basic premise was more middle class and even affluent people buy goods at dollar stores, examples of which it noted were Dollar General, Family Dollar and Dollar Tree, each with thousands of links in their chains (http://www.nytimes.com/2011/08/21/magazine/the-dollar-store-economy.html?scp=2&sq=family%20dollar&st=cse).

They may all have the word “dollar” in their names, but only Dollar Tree is a true dollar emporium, a store that prices everything at a dollar or less. Dollar General and Family Dollar long ago abandoned any pretense they sell stuff for 100 pennies. Dollar General and Family Dollar, along with other companies such as Big Lots and National Wholesale Liquidators, are part of the extreme-value retailing segment of the industry catering to those who increasingly live paycheck to paycheck, or government assistance check to government assistance check.

Most Dollar General and Family Dollar stores blossomed in the southeast, though they’ve now sprouted up in more than half of the country, usually in small towns where rents are low and the needy are many. About 30 years ago I sent one of my writers to a Family Dollar store in Kentucky to outfit himself with clothing from head to toe, inside and outside, for less than $10. He easily fulfilled his assignment. It would be harder today, given the higher prices Family Dollar now charges.

But the strategy remains the same—provide basic affordable goods in small, low-rent, off-the-beaten-track stores customers can get into and out of in a hurry. The dollar and extreme-value stores are one reason Wal-Mart has not done as well lately. Customers view them as easier, less expensive outlets to shop.

If you do visit one of those stores, keep in mind you must check a package’s volume. That $1 bottle of shampoo might actually not be such a bargain. These stores are not above having suppliers put 8 ounces of product inside what appears to be a standard 11 oz. bottle. Check the label. Caveat Emptor!


Made in China: Here’s another retailing story that didn’t sit right with me. A recent Los Angeles Times article, citing a federal study, provided what I thought was a misleading impression (http://www.latimes.com/business/la-fi-made-in-china-20110813,0,2746654.story).

No doubt you’ve looked at the country of origin of products you’ve bought and came to the conclusion everything was “made in China.” According to the government study, in the words of the LA Times, you’d have “Sticker shock: ‘Made in China’ ranks only 2.7% of U.S. spending.”

How could that be? Simple, if you include all services, groceries and gasoline purchased by Americans, none of which come from China. The economists at the San Francisco Federal Reserve say in 2010 about 88.5% of U.S. spending was on American-made products and services. Services, such as dry cleaners or plumbers or auto repair shops, are the key to this analysis, since services make up two-thirds of all spending.

Hard to argue with those facts, but easy to dissent from the intended conclusion. Of course services, groceries and gasoline are not Chinese imports. Duh!

A better study might have been, what percent of the remaining 11.5% of consumer spending came from China. Perhaps my math is wrong, but my calculation (2.7% of 11.5%) puts that at 23.5%, meaning roughly one out of every four consumer products bought in the United States was made in China. According to the LA Times, 12% of all durable goods (furniture, appliances, automobiles) purchased here last year were produced in China. In other categories, such as toys and apparel, the percentage would be even greater, I believe. I'm also quite sure you'd find a high percentage of made in China goods in dollar stores and other extreme-value retailers.

Bottom line—we’re awash in Chinese goods and the tide is rising. Until more American firms choose to manufacture domestically rather than in the cheaper labor markets of China and other developing countries, we’ll continue to be plagued by high unemployment, a generation or more of skilled workers not able to find new, comparable jobs lost to overseas production, a growing trade imbalance, and our national status as a producer country will be imperiled.