KEY POINTS:
• Trade often involves many transactions between many
people
• Raw materials produced in one country can return as
finished goods
Background:
Trade transactions have been thought of as “two-way”
for many years. A simple exchange of goods from one country
for the cash of another; or the idea that in order for American
business to sell their products overseas, we have to let those
countries sell products to us. However, as “Erica’s
Coffee” shows, in many cases trade transactions are multifaceted
with numerous stops along the way.
| In
the jeans example we saw these trade interactions involving
Mecca USA: |
| A. |
The
cotton is grown in the U.S., and shipped to Mainland China
via ocean-going freighter to be spun into thread. |
| B.
|
The
thread is transported, often by rail or barge, to a manufacturer
called Mou Fung Ltd. in the Kowloon area of Hong Kong.
Here it is dyed (with indigo dye made in China), and then
woven into fabric for denim jeans. |
| C. |
The
rolls of fabric are loaded onto a truck and sent to a
factory called Jade Knitting and Manufacturing Company.
At Jade, the fabric is cut into the pieces needed for
the jeans. |
| D. |
Some
of these pieces are actually shipped by rail to another
Jade plant in Mainland China to be sewn together, and
then sent back to the Hong Kong plant for final assembly.
Then the jeans are inspected by employees of the design
firm Purple Pin, Mecca USA’s agents in Hong Kong. |
| E. |
Finally,
the jeans are packaged and shipped by ocean-going freighters
to the U.S. and other countries in containers, where they
are then distributed by truck and rail to a retail store. |
ACTIVITY:
Research the life cycle of a product
(grades 7-12, adjust expectations to grade level)
Students
(as individuals or small groups) select a simple consumer
product or food item (shoes, clothing, fruits & vegetables,
for example).
| Research
the following questions and prepare a report for the class
that includes a sample of the product and a map which
shows all of the locations referenced as well as probable
transportation routes and cash flows involved: |
| 1. |
Where
is the product development and design done? Who creates
the idea for how a garment is styled, chooses where the
raw material should come from, where it should be manufactured
and so on? |
| 2.
|
Where
did the raw material for the product originate? If there
are several possible sources of supply, present a plausible
reason for why one source might be more likely than another. |
| 3. |
Where
and how is the raw material turned into the final consumer
product? Remember that for clothing and many other goods
there may be several intermediate steps involved; for
example, spinning yarn and making cloth before the actual
finished product is made. In some cases you may find labels
that read “Assembled in –one location- from
components made in –a different location–.“
Be sure to list all locations on your map. |
| 4. |
Where
is the final product sold? If it is sold in more than
one location, select a few representative locations to
show on your map. |
| 5. |
What
are the likely transportation routes and modes (truck,
rail, river, ocean, and air) from the source of supply
to the manufacturing locations to the retail locations? |
| 6. |
Follow
the money. Who gets paid along the way, and how many currencies
might be involved in the process (for extra initiative
points, bring in some examples of currency from the countries
involved)? Chart the money flow on your map. |
| 7. |
Who
works? What jobs are needed along the way to transform
a raw material into a useful finished product? Encourage
lateral thinking—beyond those workers who actually
touch the product; infrastructure workers, regulators,
inspectors, transportation workers and so on? |
Suggestions for Assessment |
| A. |
Classroom
grading—have students evaluate each other for completeness
of information and quality of presentation. |
| B.
|
Have students send their reports to the companies that
they research, requesting feedback. |
|
