Post-industrial economics lesson, Christmas Edition

Conversation with the seven-year-old:

He: Dad, why does my new guitar say Made in China?

I: Well, that's where it was made. Lots of things are made there.

He: I thought it was made by elves?

I: Well, it came from the elves, but they probably subcontracted out the manufacture.

He: Oh. Dad, what does subcontract mean?