"Made in China" is mostly, American?

Daniel Hom
on August 11, 2011

With the US economy still in turmoil and jobs difficult to find, many people continue to wonder how producing goods in a cheaper China benefits us. Some might say 'Buy American' to keep money--and jobs--in the US.

But according to the San Francisco Fed, buying "Made in China" might actually be doing that.

In general, for every dollar spent on a good that is produced outside the US, about 37 cents of that is actually going to a US company. For Chinese goods, that number rises to 55 cents. How? Because not all of what you pay for is the actual product. There's the rent, marketing, transport and other service-related costs that make up a bulk of what you pay for, much of which is in fact, American.

Even for clothes and shoes, where finding something that is not made in China is often more difficult than not, almost 61 cents of every dollar pays for US services.

Naturally, this is only one slice of the discussion about "Made in China." Could we cultivate more jobs if we produced everything in the States? Would consumers be willing to pay for the inevitable price increases of doing so? Will the move to sell goods online change the picture?

Hard to say, but the Fed data show "Made in China" is much more complex than just a label.