'Made in the World'
WTO Director-General Pascal Lamy, in his speech to the French Senate in Paris on 15 October said:-
What we call 'Made in China' is indeed assembled in China, but what makes up the commercial value of the product comes from the numerous countries that preceded its assembly in China in the global value chain, from its design to the manufacture of the different components and the organization of the logistical support to the chain as a whole. In other words, the production of goods and services can no longer be considered “mono-located”, but rather, “multi-located”. As a result, the notion of “relocation”, which made sense in the past when referring to the production of a product or service at a single location, loses much of its meaning. If I relocate a segment of the production chain for reasons of economies of scale, and others relocate to my area for the same reasons, the impact on my total value added, i.e. roughly speaking, my employment may be neutral, negative or positive; and nowadays, it is this balance that we have to look at very closely. If we continue, in this context, to base our economic policy decisions on incomplete statistics, our analyses could be flawed and lead us to the wrong solutions.
For instance, every time an iPod is imported to the United States, the totality of its declared customs value (150 dollars) is ascribed as if it were an import from China, contributing a bit more to the trade imbalance between the two countries. But if we look at the national origin of the added value incorporated in the final product, we note that a significant share corresponds to re-importation by the US, and the rest to the bilateral balance with Japan or Korea which should be allocated according to their contribution to that added value. In fact, according to American researchers, less than 10 of the 150 dollars actually come from China, and all the rest is just re-exportation. In the circumstances, are evaluation of the yuan - a topic which is very much in vogue these days - would only have a modest impact on the sales price of the final product and would probably not restore the co mpetitiveness of competing products manufactured elsewhere.