Thursday, August 17, 2006

Are cheap foreign imports really a ripoff?

"Competition brings out the best in products and the worst in people."
- David Sarnoff, televison and business personality (1891–1971)

Since Sarnoff died in 1971 another factor has crept into the mix to confuse and confound the issue for us. Extraordinarily cheap products or knock-offs that may never work or that break after only a few uses.

These are often sold in stores which have a "no returns" policy. The products themselves almost never have a warranty. The ones that do force you to ship the product to the manufacturer at your expense, a cost the is often greater than that of a new version of the same item. This creates waste when we throw them away.

The prices of some of these products are as cheap as five percent of the originals.

People buy the cheap products believing that they can get five, ten, even 20 of the cheaper product for the same money as they would pay for one of the original.

What they forget is the time involved in replacing items that fail, the emotion wrapped up in being ready to do something but unable to complete the task because the cheap product won't work and the cost involved in travelling to get the item replaced.

There's also the risk that we will adopt the opinion, based on our many failures with cheap products, that "everything is made cheap today and nobody backs up their products with good warranties." That opinion may be totally wrong because we don't want to pay what a good quality item is worth. We may get what we pay for, but we don't want to pay much.

I was once told that the people of an Asian country in which I was doing business (by a businessman in and of that country) did not want top quality products. "They want third rate quality, they deserve third rate quality," I was told. Those of us who live in western countries may find ourselves as deserving because of our buying habits.

There is no doubt that cheaply made products and knock-offs put some legitimate and quality manufacturers out of business, resulting in the loss of great numbers of jobs in western countries. However, attrition would look after that anyway. Those companies that will not or cannot adapt to changing conditions usually disappear from the market for one reason or another. "Cheap foreign imports" is just a convenient excuse for failure to adapt.

Some manufacturers of good quality products adapt their marketing strategies and improve their products beyond what they had been previously in order to compete. Thus we have top quality products available to us at premium prices, if we are prepared to buy them. If marketted properly, these products will sell to a market that is committed to buying products that last. Over the long term, these products may have greater value than the cheaper ones.

As to competition bringing out the worst in people, you don't need examples for that. You live them every day.

Bill Allin
'Turning It Around: Causes and Cures for Today's Epidemic Social Problems,' striving to help people see the differences so they can decide based on realities that go beyond price.
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