Competing with China

After a week of trying to get in contact with an owner of a local yard, I finally found him. The other day when I asked how many computers they had, One worker showed me the pallets hidden in the back of the warehouse. I couldn't believe my eyes. 12 pallets stacked 6 ft tall.

I approached the owner confident after crunching numbers over and over. I felt the wad of money in my front pocket just dying to be spent. I was prepared to buy all on the spot or as many as he wanted to sell. After chatting, he wanted me to make an offer. Knowing hes been buying them at shred price; I put the feelers out and offered $.20 a lb. He raised one eyebrow like I was kidding and I quickly said but for your volume $.25 a lb. He got on his forklift laughed and said" I sell direct to China. When you can make a REAL offer, let me know. You know labor is cheap in China."

I could've put several thousand in his pocket, Cash. I also said I would be a consistent buyer...No shipping hassels no waiting on payment. I don't think $.30 or $.35 would even start negotiations. $.40 would be waisting my time.

For those that buy large lots, can you compete with China?

Yes you can compete with China... the guy isnt your customer, so move on to the next one? For all you know the price couldve been right. These guys are stellar negotiators.

Your input is appreciated and respected, Ewasted. I sent a decent shipment to you, hopefully arriving today.

I can only offer what I can offer.

.25 a lb is a very fair price for CPU boxes. I would just move on and not worry about it.

You can never get hung up on one customer. I can understand we as humans always need an explanation for everything... creationism vs science... its been going on forever and will go on long after we are gone. But in business you don't always need a reason as to why someone may not do business with you. Just accept that "it is what it is" but you can take control by noting your approach and methodologies for conducting business. Learn what works and what doesnt all of the sudden the odds magically swing in your favor :)

I spent all summer trying to even get ahold of a yard owner about buying his computers. He wouldn't ever call me back and he was supposedly never at the yard. Now I know why.

We have Chinese buyers up here buying everything, even automotive scrap.

they're getting free shipping? all those ships bringing cheap plastic goods over here to sell at top dollar are going back empty, unless they fill em up with something! Seems we no longer manufacture much of anything over here. I was at mom's yesterday and got to thumping around on her sewing machine, all plastic, I tried to get a cover off but wasn't sure how, was guessing that every gear inside it was plastic too. Got to thinking later about the huge fancy big green tractors around here, and they're also covered in probably a ton of plastic. Soon as they can figure out how, if they haven't already, the wheels will no longer be steel, but concrete filled plastic!

He might be selling to China and that will only fly for a few more months if the government has anything to do about it. That being said we just cant compete with China they are not in it to break it down they are in it to HOPE that 1 out of ever 4 computers is working and they can resell it for 3 times what they bought it for. He is likley not getting much more than $0.30-$0.35lb. or $20 a unit.

20$ a unit is outlandish. Breaks down to $.80 a pound. If I thought he would take intrest at $.30 to $.35 I would of kept negotiations going. By his reaction I'm thinking he's at least at $.40 to $.50 lb or higher? $.50 is too risky I don't think I'd loose money. But, I wouldn't be making much either. That's a lot if weight and work to be finding out the hard way

Heh, I fight with China all the time. In wire they get stupid with pricing.I've seem them pay $1.55 for 35% recovery wire. If I had no labour or bills I might be able to do that. As it is now, I win some of the fights and lose more of them. I tend to do better direct with the contractor or scrapper. While the yard pays $1.00 for #1 insulated I will pay them $1.55.

Those ships heading back to China are full of mostly empty containers and probably some high tech US made machinery. The US still manufactures some stuff but it is low volume high cost specialty items.

Anyway quite a bit of that scrap you sell to yards ends up in China anyway, so they are just cutting you out of the loop (and keeping the profit you would have made).

You should have at least asked what price he is getting from them? At least you know what you are up against then. I wouldn't get hung up on it either like e wasted said. Its one customer when there are a million fish in the sea. The scrap game is like dating sometimes you get rejected sometimes you fall in love. This time you got rejected just make sure you find a rebound gf. If you are serious about it put your game face back on and approach him again. This time structure the deal like you originally stated in your first post 20 to 25 cents a lb and tell him you will bring him back everything you buy from him except the boards unless he can match the price. He can sell them to you make a few pennies on that deal then make a bunch more when you bring back the carcasses (shred), wire (copper), Heat sinks (AL and CU), and any other aluminum or stainless attachments that are inside the electronics. Heck you could even bring him back the plastics to if he can find a market for them or already deals in plastics. Sometimes in order to win over a yard owner you have to come at him with solid number that he can understand and comprehend quickly. Time is limited to them and time is money all day every day. He already knows what he pays you for the scrap items I just listed above so he should be able to do some quick math and figure out that he should come out ahead in the end even minus the boards and chips.

What I've been told is that it isnt worth it for China to send back the containers, so they leave them here. I know I can buy hundreds (maybe thousands?) of those containers all around town. It's amazing how it can be more affordable to send them raw materials, then ship back finished goods cheaper than we make here. Hopefully we'll eventually get a government that can figure things out and change it around.

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Originally Posted by shendog

What I've been told is that it isnt worth it for China to send back the containers, so they leave them here. I know I can buy hundreds (maybe thousands?) of those containers all around town. It's amazing how it can be more affordable to send them raw materials, then ship back finished goods cheaper than we make here. Hopefully we'll eventually get a government that can figure things out and change it around.

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Example of a container ship:

Emma Maersk - Super container ship arrives from China

15,000 containers (seems like alot doesn't it) on one ship, crew of 13. I'm sure ships probably don't bring back all the containers they drop off, but they do need ballast so they do load up on some. There was a show on TV about somebody building a super efficient house out of cut up containers and a space age spray on insulation.

The Chinese steel industry is government funded and controlled, without that there is no profit. Chine dumped tons of money into steel mills over the last decade it didn't need, and without government funding none of them would have been profitable.

China May Revive Tax Rebates to Help Ailing Steel Sector - Asia Business News - CNBC

"Profits at China's steel mills plunged 96 percent in the first half from a year earlier as financing costs soared, according to the CISA, a worrying combination that is threatening a sector that racked up 2.55 trillion yuan ($399.72 billion) of liabilities as of the end of 2011".

So we here in the US are giving money away (FED giving it to the largest banks for pretty much free) while in China a small interest rate hike killed all profit from the whole steel sector (meaning they were never making any money anyway)? $400 Billion in liabilities wonder what that was spent on (besides new steel plants that are pretty much idle).