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# Until now, American cell-phone manufacturers enjoyed a large

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Director
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Until now, American cell-phone manufacturers enjoyed a large [#permalink]

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20 Feb 2005, 15:53
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Until now, American cell-phone manufacturers enjoyed a large share of the cell-phone market in China. However, Chinese manufacturers are becoming more productive, selling increasingly greater shares of new phones on the Chinese market. Therefore, American companies will see a diminishing share of the profits stemming from cell-phone sales in China.

Which of the following, if true, most seriously weakens the argument?

(A) Very few cell phones manufactured in China will be exported for sale in the United States.
(B) There are still more cell phone users in the United States than China, despite the latter's greater population.
(C) American companies still claim large shares of sales in China of other electronic devices such as computers.
(D) Many American cell phones are considered to be of superior quality to those produced by Chinese manufacturers.
(E) Cell phones manufactured by Chinese companies use many imported electronic components.
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Re: CR - American cell-phone manufacturers [#permalink]

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20 Feb 2005, 16:05
It should be E assuming the imports are from US..
Director
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20 Feb 2005, 16:43
MA, I think that is a BIG ASSUMPTION...

I pick (D). assuming chinese market prefers quality product. (I am also assuming. )
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20 Feb 2005, 17:22
Sorry, Pass is not allowed in GMAT. U will have to attempt the question.
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20 Feb 2005, 17:30
Well I am not able to pick a choice here.
Either this is a super-duper ultra-tough problem or it has an error or some vague assumption.
D or E comes close, but with assumptions.
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Re: CR - American cell-phone manufacturers [#permalink]

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20 Feb 2005, 18:04
qhoc0010 wrote:
Until now, American cell-phone manufacturers enjoyed a large share of the cell-phone market in China. However, Chinese manufacturers are becoming more productive, selling increasingly greater shares of new phones on the Chinese market. Therefore, American companies will see a diminishing share of the profits stemming from cell-phone sales in China.

Which of the following, if true, most seriously weakens the argument?

(A) Very few cell phones manufactured in China will be exported for sale in the United States.
(B) There are still more cell phone users in the United States than China, despite the latter's greater population.
(C) American companies still claim large shares of sales in China of other electronic devices such as computers.
(D) Many American cell phones are considered to be of superior quality to those produced by Chinese manufacturers.
(E) Cell phones manufactured by Chinese companies use many imported electronic components.

(E)
imported electronic components indirect enlarge Chinese cellphone market.
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20 Feb 2005, 19:18
E

as electronic component can only come from US from a GMAT point of view.. ouarfffffff
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Re: CR - American cell-phone manufacturers [#permalink]

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21 Feb 2005, 00:28
qhoc0010 wrote:
Until now, American cell-phone manufacturers enjoyed a large share of the cell-phone market in China. However, Chinese manufacturers are becoming more productive, selling increasingly greater shares of new phones on the Chinese market. Therefore, American companies will see a diminishing share of the profits stemming from cell-phone sales in China.

Which of the following, if true, most seriously weakens the argument?

(A) Very few cell phones manufactured in China will be exported for sale in the United States.
(B) There are still more cell phone users in the United States than China, despite the latter's greater population.
(C) American companies still claim large shares of sales in China of other electronic devices such as computers.
(D) Many American cell phones are considered to be of superior quality to those produced by Chinese manufacturers.
(E) Cell phones manufactured by Chinese companies use many imported electronic components.

I'll take (D).

(E) does not weaken the argument. The argument is that since more people in china are buying chinese-manufactured phones, then less american-manufactured phones will be sold, leading to diminishing share in profits for american coys. Obviously, the cell phones manufactured by chinese companies may use components imported from France (or even from my backyard)!

(D) to me is just a little clumsy, but E is clumsier. If american cell phones are superior, so what? The statement tends to force us to believe that chinese cell phone buyers prefer to buy quality phones, which may be false. Nevertheless, what if the residents of china continue to buy chinese manufactured phones (low quality), and few days after purchase, the phone battery packs up (like my motorola phone), then they may be forced to turn back to american quality phones, in which case, the market for the american coys will grow again.
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21 Feb 2005, 02:15
I'll go with D

The reason for diminishing sales for American manufacturers is that "Chinese manufacturers are becoming more productive, selling increasingly greater shares of new phones on the Chinese market".. However, if the phones lack quality, it is unlikey that consumers would buy the phones manufactired by Chinese manufacturers. Therefore, Amercian manufactirers still have the consumer's confidence and this weakens the argument that their profit from sales in China would diminish.
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21 Feb 2005, 10:36
How I wish even I could pass that question. But....

Had to guess between D and E. but D seemed closer
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21 Feb 2005, 19:47
OA is (E) but I am not convinced.
Look at the stem:

Until now, American cell-phone manufacturers enjoyed a large share of the cell-phone market in China. However, Chinese manufacturers are becoming more productive, selling increasingly greater shares of new phones on the Chinese market. Therefore, American companies will see a diminishing share of the profits stemming from cell-phone sales in China.

And (E)
Cell phones manufactured by Chinese companies use many imported electronic components.

In order to weaken the argument, we must attack directly to the profits from cell-phone sales in China. (E) talks about profit from electronic components. Isn't that out of scope?
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21 Feb 2005, 20:54
(A) - sale out of china (not relevant)
(B) - again, not relevant. We're concerned with sale of cell phones in china
(C) - Not relevant. Argument is restricted to cell phones and not other electronic products
(D) - If many American cell phones are of superiror quality, then consumers will not be tempted to buy lower quality chinese manufactured phones. And if this is the case, profits should not diminish
(E) - The fact it uses many imported electronic components does not matter. The manufacturing, and thus selling price might be higher, but that is only based on the assumption the imported components are costly. A fact, we do not as yet know.

(D) for me.
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21 Feb 2005, 21:34
qhoc0010 wrote:
OA is (E) but I am not convinced.

i am also not totally convinced to OA but if chinese companies are using the eletronics devices from US companies, these US companies do not face a situation of declining profit since chines market for cell phone is growing.
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21 Feb 2005, 22:09
ah... but we do not know if the parts are imported form America, do we ?? this is too big an assupmtion to make on the GMAT.
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Re: CR - American cell-phone manufacturers [#permalink]

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22 Feb 2005, 08:30
I agree it is (E).
Stem: Chinese companies now have greater shares of the market. Therefore Amercian companies will see a diminishing shar of profits from China.

(A) Very few cell phones manufactured in China will be exported for sale in the United States.
Do not attack the argument. No exports will not help American companies' profit from China.

(B) There are still more cell phone users in the United States than China, despite the latter's greater population.
Yes, but American companies' profit in China may still be decreasing.

(C) American companies still claim large shares of sales in China of other electronic devices such as computers.
It may be true, yet it does not help American companies' profit in cell phone sales in China.

(D) Many American cell phones are considered to be of superior quality to those produced by Chinese manufacturers.
Again, it may be true. However the fact is that American cell phone companies' market share in China has been decreasing when Chinese companies' claiming larger and larger market share, as claimed in the question stem. In other words the good quality has not helped with the declination of the market share, thus cannot help with the declination of the profit from China.

(E) Cell phones manufactured by Chinese companies use many imported electronic components.
The apparent increase in Chinese companies' market share is less harmful to American companies if this is true, as American companies simply shift their focus from whole product to electronic components and can still maintain their profitability in China.
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22 Feb 2005, 10:51
Hi HongHu,
As I posted above, the conclusion is about "share of the profits stemming from cell-phone sales in China", not "profits in general" which can include "electronic components". And again, as someone said above, "imported electronic components" could come from Africa...
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22 Feb 2005, 11:32
I am convinced that it is E.

A, B and C are obviously ruled out.

D just speaks about quality. But, most of the consumers make cost-quality trade-off before they buy. Thus, D is not affecting the quality at all.

However, E weakens the argument as a general statement also. 'E' basically says that though Chinese market has grown up, it is a lot dependent on the imports. Then, one cannot claim " American companies will see a diminishing share of the profits stemming from cell-phone sales in China." because some imports may be from USA. This is better than choice D, if not the best.

ywilfred wrote:
(A) - sale out of china (not relevant)
(B) - again, not relevant. We're concerned with sale of cell phones in china
(C) - Not relevant. Argument is restricted to cell phones and not other electronic products
(D) - If many American cell phones are of superiror quality, then consumers will not be tempted to buy lower quality chinese manufactured phones. And if this is the case, profits should not diminish
(E) - The fact it uses many imported electronic components does not matter. The manufacturing, and thus selling price might be higher, but that is only based on the assumption the imported components are costly. A fact, we do not as yet know.

(D) for me.

_________________

Awaiting response,

Thnx & Rgds,
Chandra

Last edited by mallelac on 23 Feb 2005, 07:37, edited 1 time in total.
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22 Feb 2005, 12:27
qhoc0010 wrote:
Hi HongHu,
As I posted above, the conclusion is about "share of the profits stemming from cell-phone sales in China", not "profits in general" which can include "electronic components". And again, as someone said above, "imported electronic components" could come from Africa...

It is true that even E is not very strong. But it is the only one that may make it possible for US companies to not to have a decreasing profit. As for "profit stemming from cell-phone sales", profit from selling components to chinese companies who sell phones are still "profit stemming from cell-phone sales". Compared to the other four choices, those simply did not provide a reason why US companies could maintain its profitability.
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22 Feb 2005, 13:18
HongHu wrote:
qhoc0010 wrote:
Hi HongHu,
As I posted above, the conclusion is about "share of the profits stemming from cell-phone sales in China", not "profits in general" which can include "electronic components". And again, as someone said above, "imported electronic components" could come from Africa...

It is true that even E is not very strong. But it is the only one that may make it possible for US companies to not to have a decreasing profit. As for "profit stemming from cell-phone sales", profit from selling components to chinese companies who sell phones are still "profit stemming from cell-phone sales". Compared to the other four choices, those simply did not provide a reason why US companies could maintain its profitability.

Yes.

But I don't think this is a good GMAT question because both (D) and (E) contain certain assumptions in order for it to be right.
(D) assumes China's cellphones have lower quality.
(E) assumes imported electronic items come from US.
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22 Feb 2005, 17:37
qhoc0010 wrote:
Yes. But I don't think this is a good GMAT question because both (D) and (E) contain certain assumptions in order for it to be right.
(D) assumes China's cellphones have lower quality.
(E) assumes imported electronic items come from US.

Let me add my 2 cents:
(D) assumes Chinese customers prefer superior quality cell phones.
(E) assumes imported electronic items come only from those US companies which currently are in chinese market.

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