China has most of the manufacturing industries with really low-cost cost labour available. Most of the Apple devices are manufactured in the country and this helps in lowering the cost of devices. Importation tax is not applied as the devices are manufactured in the country only. The iPod is assembled in parts in factories situated in China. The price there is around $164 and while it is not the cheapest price that you would find, it is definitely on the lower side compared to many other nations in the world.
