China a World Cup winner? What a bunch of Brazuca!

The Wagon Enterprise in Dongguan, Guangdong province, which makes World Cup products, has minted more than 1.5 million models of the World Cup trophy and 400 other items, according to a previous China Daily report.

Given the huge commercial benefits, researchers from Moody's Investors Services and others have claimed the Chinese economy could benefit more than Brazil’s from the World Cup.

A closer look at the role of the Chinese enterprises in the productions chains of World Cup-related products would hardly support such a conclusion.

Most of the Chinese companies profiting from the World Cup are from the manufacturing sector. As OEMs (original equipment manufacturers) of major international brands, their gains are pitiful compared with those brand owners.

For the 2010 World Cup in South Africa, Chinese companies that made the noisy, omnipresent horns called Vuvuzelas sold them to foreign dealers at the individual price of 2 yuan ($0.32. They were sold at 40 yuan a piece by street vendors in South Africa and were priced at as high as 100 Yuan in specialty stores in the country.

In other words, the Chinese manufacturer gained only a tiny slice of the valued added from making Vuvuzela.

This year, the Brazuca, the official ball under the Adidas brand made by a Shenzhen-based company called YaYork Plastic Products, is priced at 1,299 yuan, a company staff told China Daily in an earlier report.

How much of it would go to the manufacturer in Shenzhen remains unknown, but, based on previous experiences, it could be very miniscule.

An oft-cited case of Chinese manufacturers’ poor performance in global divisions of labor is that only about 2 percent of profits from the expensive Apple iPhone go to the Chinese OEM manufacturers.