Comments by "Samson Soturian" (@samsonsoturian6013) on "Tofu-dreg Projects u0026 Poor Quality Products Are Everywhere in China, Why?" video.
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I know of seven reasons why quality doesn't matter in Chinese buildings:
1. You don't own the land, you lease it from the government because Communism. Leases are 30-70 years but there is no reason to build something that outlasts the lease.
2. Land lease revenues account for a huge portion of municipal revenue. This means city governments are incentivised to promote construction and rising housing prices.
3. State enterprises dominate just about every sector except real estate, meaning it is often the only investment available for many wannabe businessmen who don't necessarily know what they're doing.
4. A mix of bribes and lowest bidder wins contracts and permits. That is; Profit margins rarely exceed 10% of anticipated costs, but as much as 30% of the budget may be consumed with bribes. The ventures that default on payroll go defunct, but the ones that skimp on materials and quality control can survive.
5. A lot of these builds are to show off. I.E. Beijing might not necessarily need or can afford a new superhighway, but that's the city people think of when you say China and China's rivals have big highways.
6. Sometimes the build is just to disappear money. One common scam is to give the contract to a shell company owned by a confederate only for that guy to subcontract all the work to someone else, pocketing the difference.
7. Escrows aren't required. That is, you can buy a hiuse before it is built and the builders can be paid directly rather than the money being held in trust until the job is done. What difference this makes besides the vulnerability to scams is the building company can take insane leverage by simply selling houses to whoever will buy, and worry about designing them and buying land later. This allows men of modest means to either soar to glory and riches or, more likely, crash and burn when some hickup makes them run out of money to finish the build. This also means the builders are often desperate to make ends meet.
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