He did go to China, he said he visited the facility in Shanghai. He has said there is no change in cost to manufacture, just better yields, quality control and predictability of delivery. Even if that is not the case how much can he really increase his margin? And with a growing company how much does increased OpEx (expanded HQ employees) eat up of said margin.
People are greatly mistaken that just because you manufacture in China all of the sudden you're margins increase exponentially. There are far too many other components and variables at play.
He takes investment capital to Shanghai and gets a better YIELD, you say. Okay, then he will get more garments at the same margin per garment for his investment. Then he sells more garments due to yield being greater and makes more for his original investment.
Profitability as percentage of investment increased. Therefore, profit margin increased above and beyond shipping and customs tariff expenditures, which were not present when manufacturing was in North America.
Translation: You get alot more for your dollar when you manufacture in China, due to cheaper raw goods and labor.
No charge for this lesson. ;-]]
