2007-01-20

IPod index? why not a Philipino maid index?

The Chinese saying "东施效颦", telling how "aping a beauty" could embarass oneself.

But there is nothing to stop Macquarie Bank of Sydney, Australia, from doing so, by aping the BigMac index. Why not an index for "Phillipino maid wages" (or the ratio of Maid wage vs average local GDP/cap)? At least that tells us how on one country/city treats foreign workers.

There is a reason why the BigMac was chosen by the Economist, as it includes all the typical transferable and non-transfer costs in a product, a good basket for CPI index and PPP consideration.

Not for the iPod, it is almost exclusively transferrable products, and the small size means transportation cost is low. Ridiculing such uncritical thinking aside, we can still read off some messages from the data

  • The countries that tops the list are those with highest tariff and most protective, Brazil and India!
  • It also reflects the nominal exchange and hides someting about recent changes in nominal rates, as often observed in airline fare discrepancy between countries (remember the Bangkok air fare golden age from 1998-2002? when one could buy a Business class round the world ticket for US$20k!)
  • It may reflect the margin of retail (as Apple only gets the wholesale revenue and there is certain minimum number for its profit requirement). However, given the extreme high retail margin of Japan (just compare the retail price of parallel import to HK vs those in Japan, you know the Japan retailers are making much more than their counterparts in HK - it is 30% cheaper to buy the exactly same product in HK (i.e., with Warranty in Japan). However, Japan ranks fairly low in this table, what it means is that Japanese products are much cooler in general and iPod couldn't differentiate itself!
  • Finally, the price in China is fairly high, despite the fact that there is no transport cost and the highly competitive retail channel in China. -- I will let you guys figure out why this is so. But with the iPod exchange rate, it seems RMB should depreciate:)

Here is the iPod index ranking

  • Brazil $327.712
  • India $222.273
  • Sweden $213.034
  • Denmark $208.255
  • Belgium $205.816
  • France $205.807
  • Finland $205.808
  • Ireland $205.799
  • UK $195.0410
  • Austria $192.8611
  • Netherlands $192.8612
  • Spain $192.8613
  • Italy $192.8614
  • Germany $192.4615
  • China $179.8416
  • South Korea $176.1717
  • Switzerland $175.5918
  • New Zealand $172.5319
  • Australia $172.3620
  • Taiwan $164.8821
  • Singapore $161.2522
  • Mexico $154.4623
  • USA $149.0024
  • Japan $147.6325
  • Hong Kong $147.3526
  • Canada $144.20

6 comments:

Anonymous said...

Interesting... check our website www.strategy4china.com (and the attached blog). Ms. Sun Bin, strategy in China... Gilbert (managing director, China Strategy Ltd and Beijing Global Strategy Consulting....

otis said...
This comment has been removed by the author.
otis said...

PPP is the economic theory most likely to cause one to say something unbelievably stupid. Mr. James probably believes in the literal truth of the law of one price.

An Ipod is expensive in China for the same reason a Buick is. "Foreign" brands are premium even when the items are produced locally.

Tutorialblog said...

The Big Mac is gone so check out our nex technology time....


Greets Marv
Visit My Photocommunity

Gerardo said...

I was looking for info on von Klausewicz when I clicked on Google's search results re the former and Sun Tsu (Zi). To my surprise, the headline of your page's second post dated 01-19-2007 read, "IPod index? why not a Philipino maid index?"

I am from the Philippines and yes, I do take offense on your post headline. You are educated, you write all these highfalutin gobbledygook about business and economics, and you appear to be well-travelled, basing upon your profile. I bet you were sipping a cup of Starbucks cappuccino as you nonchalantly typed on your computer (let me guess, a Mac?) a description that you found suitable to better the index chosen by Macquarie Bank of Sydney, Australia. Seems to me that you have painted into a corner the professional capability of the entire race of the Philippines. Trivia, among our other manpower exports are engineers and doctors. Do you know that one of, if not the highest median income earners in New York, are Filipino nurses? We speak fluent English despite coming from a third-world country.

You said, "Why not an index for "Phillipino maid wages" (or the ratio of Maid wage vs average local GDP/cap)?" Does a maid from the Phillipines represent the whole population of contract foreign workers in your country? Are all the foreign workers you have only Filipino maids? If they are indeed the majority, aren't you oversimplifying your observation? I don't have your astute and analytical mind so you have to forgive me if I don't get it.

FYI, your average "Phillipino maid" is either a college graduate or is college educated, and yes, they can read and write English. No thanks to Marcos and to government corruption, they become maids to survive. You can bet your last dollar that an overwhelming majority would rather do something else.

I am just wondering how you would react if the tables were turned. How about, "Chinese take-out delivery guys index" to tell us how undocumented illegal foreign workers survive in a country or city.

There is a reason, why The Economist chose the Big Mac Index and Sydney, the iPod index. Perhaps it is, not to tread on racial lines and sensibilities? You appear to be the smart one, you tell me.

By the way, it's Filipino, not Phillipino. If you're going to write something perceived as overbearing, at least get the spelling right.

Sun Bin said...

gerardo,

thanks for your comments. i apologize for being careless when i used this title. i meant no offense to the filipino people.

the reason i chose filipino maid's wage is precisely because it is not a good way of measurement. it is full of discrimination and artificialness. e.g. in HK, the wages of maids from different coutnries are different. filipinos maid earns the official wage of about HKD4000/month because they command better english (and as you said, are well educated), than those from other SEA countries. But they still earn a lot less than local maids (that is discrimination) despite their better education.
it shows how absurd our world has become when trade/work barriers are imposed.