By Joel Thurtell
If you’d asked me a couple months ago to name the unit of Chinese currency, I’d have drawn a blank.
It was all a big yuan.
As near as I can tell, “renmimbi” and “yuan”can be used interchangeably.
Nowadays, it’s hard not to know what the “renmimbi” is.
Everybody is writing about the renmimbi.
Correction — everyone is ganging up on the renmimbi.
The New York Times alone today, March 15, 2010, ran two news stories — one on Page One, one inside the A section, AND a Paul Krugman column, all excoriating China for keeping the value of the renmimbi artificially low. The Wall Street Journal also weighed in, suggesting that inflation in China might force the Chinese to recast upward the value of its currency.
Nobody outside China seems to think the renmimbi ought to stay where it is.
I think there may be others in the U.S. and other parts of the world who see an advantage to China’s present currency policy, but we aren’t being quoted in the business stories. We aren’t the policy wonks on every reporter’s short list of talking heads.
Everybody seems to believe that the cheap Chinese money is stealing business and jobs from countries like the U.S. But the way I see it, Chinese currency policy is actually CREATING business opportunities — and jobs — outside China.
I hadn’t thought much about this until recently. But through my fledgling publishing company, Hardalee Press, I’ve learned how China’s cheap currency can help me save a project that was dead in the water and, by the way, provide work for Americans.
I’m sure Krugman, the Times’ Nobel laureate economics columnist, could tear my argument to shreds with all sorts of data about balance of trade and unfair currency pricing.
I’m not a Nobel prize-winner. I’m just a guy trying to make a buck selling books.
I have a little book I want to bring out in hardcover with a dust jacket. I priced the printing cost in the U.S. and production of this book would cost me about $17 per unit. This is a book I planned to price somewhere between $13 and $16 per copy.
With a $1-to-$4 deficit, the book looks dead.
That is just the beginning of the bad news. The cost of printing is not the only expense involved in publishing a book. There are many other costs, but the principal drains on cash are in the areas of editing, design and typesetting. But as you can see, the printing charge alone doomed the project. I’d be paying at least a buck per book more than the retail price of the book. But that is not the end, because I wouldn’t be charging retail for the book. Typically, distributors want 50-65 percent of the retail price. Let’s say I set the retail price at $15 per book and I allow distributors and bookstores to split 65 percent of that figure. I’d be giving up $9.75 per book. I’d get to keep $5.25 per book, from which I’d have to pay $17 per book to the printer without consideration to other costs.
Talk about deficit spending!
If I paid the printer $17 per book, I’d be losing $11.75 each before I got around to paying editors, designer, typesetter, proofreader and incidental expenses involved in writing and publishing a book. You know, postage, packing materials, paper for printing drafts, printer ink and a host of costs that run the expenses up.
The project was dead. No way could I afford to subsidize the sale of my book.
The first bid from a Chinese printer was 68 cents a copy.
Think about that: Sixty-eight cents a copy is 1/25th what the U.S. printer wanted.
The high Chinese bid was $3 per book.
Suddenly, the project went from an impossible dream to something I could accomplish with some hope of, at least, breaking even.
If I ordered these books from China, I could afford to pay editors, designers, artists and the various expenses involved with producing a book. In other words, income from the project would go to U.S. vendors. Professionals who would otherwise not see a dime from this project would be paid. I might even make a profit after all the bills were paid, which would mean that I too would have created a job for myself.
All thanks to the cheap Chinese currency.
While Hardalee Press is still thinking about the Chinese option, other U.S. publishers — including some academic presses — are having their books printed in China. I imagine they’ve done the arithmetic and realized that printing in China can revive otherwise dead publishing projects and create livelihoods for Americans.
It’s hard for me to see a problem with the renmimbi.
I say leave it alone.
Drop me a line at firstname.lastname@example.org