Economics: Report of the trip to China
Introduction
Date: 18th June, 2012
Itinerary: We visited the factory workshops, display room and the dormitory of the Dongguan
Longchang Toy Factory, which has over 40 years’ history. It mainly produces electronic plastic toys and
digital electronic toys for export to developed countries like the US and Japan.
Group members: 5C Angelina Wong (32), 5C Tracy Liu (22)
Photo:
Case One
Venue:
Photo:
Description:
The robot production process is divided into a few sub-processes including the preparation of wire
clippers, combination of hardware parts and the operation of circuit breakers. As each worker
specializes in one sub-process, complex division of labor is practiced.
As a result, average labor productivity can be increased due to the following reasons. Firstly, capital
goods like machines can be used intensively and efficiently by factory workers engaging in the
respective production process. In addition, mechanization can be practiced with different machines
developed for different sub-processes. The intensive use of capital in production in turn increases the
productivity of other production factors like labor. Also, as it is observed that each factory worker is
only responsible for one sub-process, he or she does not have to physically shift from one task to
another, leading to efficient time use.
Case Two
Venue:
Photo:
Description:
The factory director mentioned that the cheap plastic toys produced by the toy factory are mainly for
export to developed countries like the US and are commonly found in fast food restaurants and
daycare centers all over the world.
In fact, China’s specialization in and mass export of labor-intensive light industrial products like toy
robots can be explained by the principle of comparative advantage. As the technological level of the
US is relatively more advanced than China’s, the US will forgo more units of high-tech products like
automobiles per unit of toy robots produced compared to China. Since China’s opportunity cost of
producing toy robots is lower than that of the US, China enjoys a comparative advantage in the
production of toy robots. Meanwhile, due to the reciprocal nature of comparative advantage, the US
enjoys a comparative advantage in the production of automobiles. The principle of comparative
advantage states that if each country specializes in producing a good in which it has a comparative
advantage, i.e. China specializes in producing toy robots while the US specializes in producing
automobiles, the total output of both goods will increase and be higher than under self-sufficiency. As
long as the terms of trade is between the exporting country’s (China’s/ the US’s) cost of producing the
good (toy robots/ automobiles) and the importing country’s (the US’s / China’s) cost of producing the
good (toy robots / automobiles), mutually beneficial trade exists and international specialization is
possible. This explains why China is the exporter of toy robots and importer of automobiles.
Reflection:
Not only can the trip to China expose us to the actual working conditions of China’s labor-intensive
factories, but it also enables us to apply relevant economic theories to real-life situations, thus offering
us an insight into keys to learning economics effectively – always associating concepts we learnt in
lessons with our everyday life exposure and drawing economic analysis to explain day-to-day
phenomenon through the skilful application of economic theories, thereby gaining a more in-depth
understanding of relevant concepts.
Division of labor
Name
Duties
Angelina Wong
Case 1 and 2
Tracy Liu
Introduction and reflection