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After the ceremony, Zhang Ruiqiang sat with Feng Yu because Feng Yu told him something else, which made him confused.
"Feng Yu, didn't you say that the American automobile industry has huge problems, especially the labor cost is the highest in the world, so it is not suitable for building a factory? Why does Bingcheng Machinery want to build an automobile factory in the United States?"
Building a car factory in the United States is more expensive than producing and transporting it from Brazil. This is very uneconomical.
Feng Yu explained: "We built a factory in Brazil before, specifically for sales in the Americas. Labor costs in Brazil are very cheap, even cheaper than those in China. Among big countries, they may be second only to India."
"We build a factory in Brazil to produce, then transport it to Canada, pay a tariff of 16.7%, and then enter the United States from Canada. Directly entering the United States, we have to pay a 25% tariff. Canada and There is an agreement between the United States that they only need to pay a 5% tariff, so the overall payment is 22.5% and a tax saving of 2.5%."
This can be regarded as a reasonable means of tax avoidance. Both Bingcheng Machinery and Canada have benefited, while the United States has suffered some losses.
Are you saying that the United States doesn’t know these methods? of course I know. But in the agreement with Canada, the United States also has many benefits in other industries. In particular, cars exported to Canada from the United States only need to pay a 5% tariff. This is so important.
In the past, the three major automobile manufacturing companies in the United States were very famous. Now that it is in decline, this kind of preferential agreement is even more needed. If Canada raises tariffs, the competitiveness of U.S. automobiles will decline, and the road to recovery for both GM Auto and Collision will be far away.
"Now, many car factories in the United States are bankrupt, including those of Japanese and European car companies. They would rather produce and sell from other markets than build factories in the United States. They can't stand the auto unions there. .”
"The place they chose to build the factory is different from our choice. They chose Mexico. Because they feel that building a joint venture car factory in Brazil will leak their technology and allow Brazil to quickly catch up with them like China. technology and take their cars off the market.”
We know that labor costs in Brazil are lower and more cost-effective than building factories in the United States, but those car companies just don't build factories in Brazil. Isn't this a technological blockade
They also have a joint venture factory in Brazil. Just like the joint venture factory in China in the previous life, they use those outdated technologies to jointly produce cars for sale. What if they need some better cars over there? Simple, import it. From the United States, sell to Brazil.
Car import tariffs are different between various regions. For example, between China and the United States, they are 25% each other, but between the United States and the European Union, they are 2.5% each other. This is between them. trade agreement.
In short, if you are high to me, I will be high to you; if you are low to me, I will be low to you. Of course, this is a situation where the status of both parties is not much different.
Just like before China's accession to the WTO, China's automobile import tariff was as high as 70%, and it was not to protect the development of its own automobile companies.
If there is a 7% tariff at that time, foreign cars will flood in like crazy. With better technology and the same price, how can Chinese car companies still survive
Of course, there is actually another way, which is to continue to reduce mutual car tariffs. Then Bingcheng Machinery does not need to build a factory in the United States and can just export directly.
But in that case, if tariffs are reduced in the same way as in the EU, all European and American cars will flood into the Chinese market. I am afraid that the situation of Chinese car companies will face serious challenges again.
Bingcheng Machinery Manufacturing Group can handle it even if it relies solely on its spare parts business, but other car companies may not be able to handle it.
Since tariffs cannot be lowered and the U.S. market must be completely opened, it is necessary to build a factory in the United States.
In fact, there is another option, which is to build a factory in Mexico and then export it to the United States. The tariff is only 5% and the price is very low. The cost of auto workers in Mexico is much lower than that in the United States.
There are also rumors that the auto tariffs between the United States, Canada, and Mexico may also be reduced to 2.5%, or even lower.
Just like the United States and the European Union have an agreement with Japanese countries, and the Japanese car tariffs are 0, then the United States and the European Union must also have the lowest car tariffs for Japanese countries.
The island country is not afraid, because the sales volume of any car in any country has never ranked among the top 20 in the island country. Cars produced by Japanese car companies are the most popular among Japanese people.
Low tariffs are more suitable for island countries to export cars. Their cars are also considered one of the pillar industries. Now Fengtian has become the world's largest.
However, now that European car companies are beginning to build factories in Mexico, on the one hand, it will quickly increase the cost of Mexican car workers. On the other hand, will the United States just watch them take advantage of the loopholes
The biggest possibility is that the United States will initiate a process to add some punitive tariffs to European cars imported from Mexico to protect the interests of the United States.
Analysts from Fengyu Consulting and Taihua Consulting believe that if you build a factory in Mexico, unless it is a joint venture, you will not enjoy tariff preferences at all.
As for exporting to the United States through Canada, we are now warned that we can only export to the United States directly from Brazil, otherwise we will face tariff penalties.
Feng Yu made a detailed calculation. When building a factory in the United States, the labor cost actually did not increase much. However, the welfare requirements of the American auto union were so deceptive that no car company could afford it.
But now that all the automakers have gone bankrupt, the auto union has kept a much lower profile. At this time, when other automobile factories are withdrawing their investment and going bankrupt, Bingcheng Machinery Manufacturing Group will probably get some preferential policies, such as tax exemptions and so on, when it builds factories there.
This time, what is being built in the United States is a fully automatic automobile production line, and the requirements for automobile workers are much lower. Auto workers are now very unemployed. Feng Yu can help resettle some, and Auba Niu will welcome them very much.
At the same time, because the degree of automation is extremely high, the workshop conditions will be very good. Just like ordinary factories, various subsidies from the automobile union can be completely eliminated.
Plus, isn’t Obama going to implement universal health insurance? Feng Yu will respond positively and leave the aspect of medical insurance to the US government, which can also reduce expenditures.
As for pension insurance, Feng Yu's own bank has insurance business, which he can digest internally and reduce costs.
"All in all, although the cost is still slightly higher, it is not much different. The important thing is that it has helped Obagniu solve the problems of relocating some bankrupt factories and unemployed workers. Obaganiu promised to give Fengyupai Helianxiang Brand has some preferential policies, but overall, it’s still profitable.” Mobile phone users please visit m.read for a better reading experience.