The End of the World As We Know It
There are also growing concerns about the quality of the products we import. Mattel’s toys, Colgate toothpaste, clothing, fish. Before the end of the year there will be others. Our drive to lower product costs creates the desire and need to cut corners. I believe that inspectors and others who enforce product standards are compromised as they help their companies ensure low costs and high fill rates. In the end, we are all complicit. Yet, it’s clear that this will change and we will be devoting more attention to product quality and integrity.
Finally, the politics of global expansion will perhaps be the most significant factor yet. I am somewhat amused by the short sightedness of political leaders who believe that forcing changes in China’s currency and taxation policies will not have a major factor on the American consumer. In one weekend in July our costs increased three to 13 percent due to the VAT rebate changes made by the Chinese government. These changes reduced refund rates and even eliminated export VAT refunds for a broad range of products. These actions, like others made over the last few years, were instituted to address China’s ballooning foreign trade surplus.
What do all of these changes mean to the CE industry? We will have to change from an age of selling products that are cheaper with more features to one where we will have to sell more expensive products with fewer features. We will have to focus more on building selling environments within our stores. We will have to prepare our salespeople to deal with deeper scrutiny over the products they sell. We will need to build organizations that can monitor and maintain the quality of all our products. We will also need to look for sources other than China. Other countries that are not competitive today will start to look more attractive.