Every day laptops, shirts and a billion other products are on their way to America with the label: “Made in China.”
But in mid-2011 a small town called Americus in Georgia began sending something back with: “Made in USA.”
They were disposable chopsticks from a single factory working around the clock to produce two million each day. And the factory owner, Jae Lee, had high hopes of producing 10 million each day by the end of the year. He told the UK’s Daily Telegraph: “When I opened this business the reaction from my friends and family was: ‘Are you crazy? Making chopsticks here?’”
The business, Georgia Chopsticks, exported all their produce to China and gave jobs to a recession-hit town that at one point had unemployment of 12%.
The economics of exporting chopsticks
China has a bit of a shortage of timber. The Chinese government took action to protect the country’s forests with the Natural Forest Protection Program in 1998. This included restrictions on logging that continues to make timber a high demand resource in the country. Also Russia increased export duties on timber in 2007.
However, in Georgia there is an abundant—and so cheap—supply of Sweet gum trees and Poplar trees ideal for making chopsticks.
But the biggest cost of manufacturing something in the USA rather than sending it off to China is labour. Chopsticks are pretty simple which reduces the need for labour. Combine cheap inputs with limited labour costs and you have a product that’s extremely cheap to produce.
Of course then there’s China’s insatiable demand. They have over a billion mouths to feed and their favourite way to do so is with cheap disposable chopsticks.
For all its economic merits and innovation, Georgia Chopsticks just didn’t work out. The local paper, Americus Times-Recorder, reported in April last year the company was placed in receivership with a temporary restraining order so no records could be destroyed.
It is not clear what went wrong but maybe the economics of exporting chopsticks to China were just too good to be true.
Made in Australia
There aren’t many “Made in Australia” tags travelling back to China. But there are a few.
The closest thing to chopsticks could well be Ugg boots made from Australian sheep in Australia. Our Agriculture is well regarded over there so this is a luxury good. And more broadly, Aussie beers and wine are respected. Australia sold almost $200 million of alcohol to China in 2011.
But our largest elaborately transformed manufacture for export to China is actually pharmaceuticals. Mostly medicaments.
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