China's Communication Cost Gone Wild

A health economy relies on unblocked flowing of entities, tangible (product, raw materials) or intangible (information, knowledge, labor, etc.). On both ends, the cost of communication is rising as a result of its political structure.

The Great FireWall (GFW) and Gold Shield Project not only blocked 80% of meaningful information flow, it also slowed down communications within mainland China as well as suppress innovations from within. These cost was mandated by the government to control people's mind.

The high cost of ground transportation, on the other hand, reflect a lost control of the central government in resource sharing deals with local authorities. The ground transportation cost in China is already twice of the world average and still climbing. In the first half of 2011, cost of ground transportation totaled CNY 3.7 trillion, a 18.5% increase from same period of last year. According to 2010 data, the raw profit of road toll companies is 59.14%, which place it one of the most profitable markets in China.

Although the central government would not like to see a package tolled dozens of times on a stretch of 100 miles public road, it does not have the resolute to argue with local government who set up random toll stations as revenue resource because it relied on local authorities's heavy hand to control unhappy citizens. One example, the central government's mouth piece, CCTV, revealed the express way which connects Beijing and its airport was only approved to toll one way traffic, which both direction had been tolled for years. The local authority continued to toll both ways after the central government vowed to crack down unlawful toll stations.

China's is riding on a bullet train with no brake, as many pointed out, after the Wenzhou train disaster. The sole power so far was the rapidly increased productivity, released from the confinement of tight government control. However, the rising communication cost has become a huge dragging force. The old question is when the train will run out of rail, while the political structure is only slowing down the speed new rail can be laid down.

The Manufacturer's Cost of A Made-in-China DVD Player

Although China made the most DVD players in the world, it does not own any of the core patents in this technology. After the MPEG group announced an extra $2.5 per piece patent licensing fee in May 2006, the patent licencing cost per made-in-China DVD player exceeds $20. In other words, the Chinese manufacturers pay more than $20 for each DVD players they made. And the licensing cost is still keep raising. Philips just submitted another batch of related patent to the Chinese patent office.

Consumer's final cost of a DVD player found on Froogle today:

Insignia™ DVD Player with MP3 Playback/JPEG Viewer	$25.45	Best Buy
Coby Compact DVD Player - DVD207	$29.99	Target
SpectronIQ 1-disc Progressive Scan DVD Player	$29.99	Sears