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How Chinese companies make a profit by selling mobile at such low cost?

They don’t make money, on purpose.

They use predatory low price to scare away any competitors. These companies all work for China – China is actually a single company, the biggest company in the world. These companies don’t make money so no one can compete – and they extract foreign currencies from western buyers.

The China Inc wants to obtain western currency.

China is not really a free economy – the people of China do not own land or properties. Even their houses are only for 70 years rights of use – the land becomes to country, and hence any business that runs on the land has to belong to the country. The Chinese government is the biggest capitalistic company. Consider all Chinese companies their subordinates – and you get the idea.

The Chinese companies purposely do not make profits, so the western buyers are addict. That is their game plan. They sell labor at amazing low cost to obtain buyer contracts.

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It is important to explain basics of supply chain and channel pricing. When a merchandise is sold in USA in a store like Target or Amazon, it carry a retail price of say 30 dollars. But the merchandise is a western brand, it is only manufacture in China. They stores obtain the source items for about 2 dollars, and the rest of the money (28) is pure channel margin. The Chinese factory’s profit is make within this 2 dollars. For that they spend capital, build factory, hire workers, and make things, and then sell their source items for amazing low price. When we say “China profit’ we are talking about the 2 dollar source pricing. The rest of the “profit” has nothing to do with Chinese factory and factory owners.

China decided to make small profits on that source…!

They are willing to “make no money so that no one else can make money”.

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