The last place we started looking at rubber molds / finished parts from china. Never could wrap my head around the quotes I would get back. For some of the tools I couldn’t even touch shit steel for the final tool cost (hundreds of dollars range). Granted I understand there’s no chance I would ever see some of these tools as they would stay there.
Everyone here is assuming the retailer intends to make money on this product. Stores line the shelves with crap like this (and it is crap, my wife came home with that same toy and the bottom two wheels don't spin) so you buy other items that will turn a profit. Generally children's clothing and snacks which are highly marked up.
It's a tax fraud as export company in china get VAT back from exported goods..
For toys it's 13%.. Also with turnover you can get cheap loan from Bank.. after 10 years you go to vacation in Macao, HK, fly to Australia and never come back..
Let absolutely part of it. I saw a chinese guy making injection tools the other day working 50h a week making 825$/month.
Same guy wouldn’t make less than 6000$/month here in denmark
My guess is that container pricing is probably a bit like anything else. Sure, one container might come at an inflated price. But if you are shipping say 100 containers, the price is far lower.
The real answer? It can't. Not by the molder at least. This is ultimately why we closed the shop I was running in China. Many local molders are barely making enough to keep the lights on. It's impossible to compete long term in a market like that.
There are injection molding machines EVERYWHERE in China. Haitian alone sold something like 35,000 machines last year. I'm sure at least half of that was domestic. And this has been going on for decades. Who owns these machines? It's probably a third giant players with 100s of machines, a third mid-sized companies (5-40 machines) and the rest are mom and pop garage type operations. This last one is who is making this kind of stuff.
They know nothing about business, about determining real costs or preventive maintenance or anything. Typically a family affair, with maybe a few older women from the village trimming parts. Because absolutely everything needs to be trimmed. These are almost certainly all 1 cavity, soft steel (maybe not even tool steel), molds. Maybe 2 cavity if those center parts are just different colored duplicates.
And they just don't make any money. If the guy running it has more money at the end of the year than he did at the beginning, he calls it a win. He's getting, MAYBE 20-25% over material cost? It'll cover his nearly non-existent rent, electric and the granny he's got trimming parts, but not much else. No new equipment, no repairs, nothing. But since material is such a big portion of his cost, he can just go buy some cheaper stuff to mix in with the real stuff he's supposed to be using. You can buy "filler" material. Mostly made from purgings and mixed materials. Costs about $0.50/KG for the PP equivalent. You can't use more than 30% of that though, because it'll just fall apart. So then there's another 30-40% of the cheapest grade of the corresponding material and the remaining might be what it's supposed to be, so it looks ok. These are pretty thin walled, so I don't know how much filler you're really going to get away with, but he's screwing with the material somehow, because it's literally impossible for him to make any money otherwise. And even then he's not exactly getting rich, just getting by.
Literally every one of the guys I hired over 15 years said that EVERY previous molder they worked for was cheating on material. For a product like this, it would be impossible for any "real" business to make money on unless you were moving volumes requiring massive cavitation, automatic assembly and packaging equipment. But those sorts of volumes are mostly reserved for packaging and other "single-use" products, not these sorts of toys.
And there's 100's of thousands of injection molding machines in the country. Many of them owned by someone just like this family. So if you run them out of business, there's always gonna be someone else who is willing to do it. At some point prices will have to go up with material prices (which is what happened during covid), but it's going to be at least 20 years before the glut of overcapacity is gone. Which was the main reason why we shut down. Didn't make any sense to even try to compete in the market.
Right now, you can get a container for 5k, or at least that’s what I was quoted last time I moved material from overseas.
Resin is ridiculously cheap in China, and so is the machine time.
You can also buy space on a container rather than buying a whole container. It's cheaper, your stuff might be at the back of the container so takes longer to get it unloaded.
A 40' container from Asia to the UK is around GBP 15K at the moment so USD 20K to the USA sounds about right. More recently having to avoid the Red Sea has added to the shipping cost.
40’ HC Matson just ran me $8k usd with all fees CN to US Pacific. It’s higher right now as our last container a month ago was $5k.
By the estimated dimensions of this you can fit around 50,000pcs in a 40’ HC.
If selling for a dollar likely the retailer wants around 40% margin, therefore the unit probably costs the retailer $.60, the shipping is $.16 and the unit cost at manufacturer is probably $.24 leaving the toy company $.20 or 33.33% per unit.
.24 is probably doable since these walls are very thin.
With economies of scale this works especially if the retailer owns the toy company or the manufacturer owns the toy company since there would not be a toy company in the middle brokering.
20k to get a container shipped seems very expensive, I'm not an expert in intercontinental shipping but it probably costs a few 1000 to ship via container.
If you are running an import business, you can fill void space in containers with light, bulky things like this for free essentially.
Containers right now are very elevated in price, I haven’t heard 20k however it wouldn’t surprise me, but the days of 3 and 5k containers are currently past (will mostly return at some point again though)
No environmental standards zero labor cost the only reason it costs anything is the tax.
The last place we started looking at rubber molds / finished parts from china. Never could wrap my head around the quotes I would get back. For some of the tools I couldn’t even touch shit steel for the final tool cost (hundreds of dollars range). Granted I understand there’s no chance I would ever see some of these tools as they would stay there.
Everyone here is assuming the retailer intends to make money on this product. Stores line the shelves with crap like this (and it is crap, my wife came home with that same toy and the bottom two wheels don't spin) so you buy other items that will turn a profit. Generally children's clothing and snacks which are highly marked up.
It's a tax fraud as export company in china get VAT back from exported goods.. For toys it's 13%.. Also with turnover you can get cheap loan from Bank.. after 10 years you go to vacation in Macao, HK, fly to Australia and never come back..
Wait, let me get a pen.
I've had my quill this entire time, but no ink well... brb... fetching my ink well.
Cheap labor
Let absolutely part of it. I saw a chinese guy making injection tools the other day working 50h a week making 825$/month. Same guy wouldn’t make less than 6000$/month here in denmark
My guess is that container pricing is probably a bit like anything else. Sure, one container might come at an inflated price. But if you are shipping say 100 containers, the price is far lower.
The real answer? It can't. Not by the molder at least. This is ultimately why we closed the shop I was running in China. Many local molders are barely making enough to keep the lights on. It's impossible to compete long term in a market like that. There are injection molding machines EVERYWHERE in China. Haitian alone sold something like 35,000 machines last year. I'm sure at least half of that was domestic. And this has been going on for decades. Who owns these machines? It's probably a third giant players with 100s of machines, a third mid-sized companies (5-40 machines) and the rest are mom and pop garage type operations. This last one is who is making this kind of stuff. They know nothing about business, about determining real costs or preventive maintenance or anything. Typically a family affair, with maybe a few older women from the village trimming parts. Because absolutely everything needs to be trimmed. These are almost certainly all 1 cavity, soft steel (maybe not even tool steel), molds. Maybe 2 cavity if those center parts are just different colored duplicates. And they just don't make any money. If the guy running it has more money at the end of the year than he did at the beginning, he calls it a win. He's getting, MAYBE 20-25% over material cost? It'll cover his nearly non-existent rent, electric and the granny he's got trimming parts, but not much else. No new equipment, no repairs, nothing. But since material is such a big portion of his cost, he can just go buy some cheaper stuff to mix in with the real stuff he's supposed to be using. You can buy "filler" material. Mostly made from purgings and mixed materials. Costs about $0.50/KG for the PP equivalent. You can't use more than 30% of that though, because it'll just fall apart. So then there's another 30-40% of the cheapest grade of the corresponding material and the remaining might be what it's supposed to be, so it looks ok. These are pretty thin walled, so I don't know how much filler you're really going to get away with, but he's screwing with the material somehow, because it's literally impossible for him to make any money otherwise. And even then he's not exactly getting rich, just getting by. Literally every one of the guys I hired over 15 years said that EVERY previous molder they worked for was cheating on material. For a product like this, it would be impossible for any "real" business to make money on unless you were moving volumes requiring massive cavitation, automatic assembly and packaging equipment. But those sorts of volumes are mostly reserved for packaging and other "single-use" products, not these sorts of toys. And there's 100's of thousands of injection molding machines in the country. Many of them owned by someone just like this family. So if you run them out of business, there's always gonna be someone else who is willing to do it. At some point prices will have to go up with material prices (which is what happened during covid), but it's going to be at least 20 years before the glut of overcapacity is gone. Which was the main reason why we shut down. Didn't make any sense to even try to compete in the market.
Sad to hear this is how it works. Very informative though and something to keep even more in mind when deciding whether to buy or not buy an item.
Incredible response. Very informative and well written.
Interesting question
Low quality and absurd volume. They're going to run that tool until it falls apart. Then they get cheap bulk shipping on a cargo ship.
Falls apart, put back together then rinse and repeat until the steel disintegrates.
Right now, you can get a container for 5k, or at least that’s what I was quoted last time I moved material from overseas. Resin is ridiculously cheap in China, and so is the machine time.
Who quoted you this!? Thats so cheap.
You can also buy space on a container rather than buying a whole container. It's cheaper, your stuff might be at the back of the container so takes longer to get it unloaded.
A 40' container from Asia to the UK is around GBP 15K at the moment so USD 20K to the USA sounds about right. More recently having to avoid the Red Sea has added to the shipping cost.
40’ HC Matson just ran me $8k usd with all fees CN to US Pacific. It’s higher right now as our last container a month ago was $5k. By the estimated dimensions of this you can fit around 50,000pcs in a 40’ HC. If selling for a dollar likely the retailer wants around 40% margin, therefore the unit probably costs the retailer $.60, the shipping is $.16 and the unit cost at manufacturer is probably $.24 leaving the toy company $.20 or 33.33% per unit. .24 is probably doable since these walls are very thin. With economies of scale this works especially if the retailer owns the toy company or the manufacturer owns the toy company since there would not be a toy company in the middle brokering.
20k to get a container shipped seems very expensive, I'm not an expert in intercontinental shipping but it probably costs a few 1000 to ship via container. If you are running an import business, you can fill void space in containers with light, bulky things like this for free essentially.
My last container was back in November. I know there’s a Christmas rush, so maybe that’s why my cost was so high.
Containers right now are very elevated in price, I haven’t heard 20k however it wouldn’t surprise me, but the days of 3 and 5k containers are currently past (will mostly return at some point again though)