posted on Aug, 7 2011 @ 04:39 PM
reply to post by burdman30ott6
Originally posted by burdman30ott6
Well then, the answer here is painfully obvious. Monday morning, enact the largest tarriffs on Chinese produced goods entering the US ever seen.
I'm talking about hundreds of percetage points worth of import tarrifs. We'll see how Big Red feels about the US dollar when they're suddenly
seeing scarcely any of them feeding their country anymore.
For the third time in the past 2 days, China needs to shut their mouth or it will be shut for them.
I don't claim to be an expert in all things business, by any means. But I do know what I have seen from the inside of some very large companies. They
have slowly worked themselves into a precarious position and have become dependent upon the availability of low priced asian produced goods.
The larger businesses are subject to the rules and demands of their buyers such as Walmart. They demand a specific profit margin plus a built in
marketing allowance plus a markdown fund, etc. etc. For instance, a $2.00 MSRP item is sold to Walmart for about $0.45 (if its a good day). The
company who made the item has to pay their employees and operating expenses. They also have to pay import costs. In order to make enough money to
continue business they must make a specific profit margin as well. When all is said and done they must buy the item from the asian factory for about
$0.15. This price (plus the demand for quick turn around time) determines the quality and materials of the product.
These companies have all based their entire business model upon the knowledge that this item can always be produced for $0.15 (or less). And the
larger they become, the bigger the impact will be in the event of a sudden interruption in any part of their dependable product development chain.
And the whole machine is driven by the consumer demand for more variety and lower prices.
So, imagine what will happen if the $0.15 asian produced item is suddenly no longer available to the USA manufacturers. There is no way they can have
that same item produced here in the USA for $0.15 at the flip of a switch. That same item will cost $0.85 to produce here. The ripple, of that sudden
change, would be huge. And I don't mean only for the company in question. People will loose jobs, companies will go under, the supply chain will be
interrupted. Its just like in nature, everything is connected to everything else.
Some of them have alternate factories where the item can be produced, but it is not meant for a total changeover of the entire product line. And it
will not be at the same price. There is a reason why most of their goods are being produced in China, Thailand, and Korea.
These companies seem, on the outside, to be huge and perfect and wise mega-gods. But they are not. They are just people. You all would be shocked to
see the inside workings of some of these large companies. They are not the well-oiled machines which they appear to be. Many of them are just one
crisis away from total collapse.