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Do you buy Australian, or do you buy cheap?

August 16th 2009 03:19

Hannah Kovacs in her $18 wedding dress

In 1991, just before moving overseas to live, I decided to consolidate all my addresses and phone numbers in a new contact book. This item, basically a few blank sheets of paper stuck together with glue, cost me just under A$10. A similar item in an Australian newsagent today will cost a fraction of the price.

How is it that, over the past 20 years, so many things have become so much cheaper?

The reason is that far more consumer products are now imported from China, India, Indonesia and other countries where wages are much lower than Australian wages. The prices we pay for the items produced reflect the lower production costs.

Many argue that this is to the detriment of Australian business and Australian jobs. Others argue that that this is to the benefit of the consumer. Economists and regulators argue that this is about free and fair markets, and reasonable business practice.

Hannah Kovacs is a consumer who stands fairly in the free trade corner. An online poll conducted by Bride to Be magazine in early 2009 estimated the average bride spends A$2,200 on her wedding dress. Kovacs paid A$18.

She's a psychology student at the University of Queensland. The wedding dress industry, like the stationery industry used to be, is notorious for abusing the lack of a competitive market by ripping off consumers. Kovacs was quoted $4,000 for a dress in a Sydney shop. Asked if the dress was made in Australia, the store was at least honest: no, they said, it was made in China.

Kovacs, still paying for tertiary studies, could not afford $4,000 but she got an idea. She went online and researched Chinese garment makers — at the Chinese end. What she found is professionalism, service, quality — and an $18 price tag for the dress of her choice. Postage and insurance brought the total price to $185.

She found the same gown available in an Australia shop. It sells for $1,500.

So do you buy Australian, and get ripped off, or do you buy at fair market value?

news.com.au

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Posted By: Chris Champion - Category: China, Australia, Consumer fights back, Consumer opinion, Economics

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Opinions can not be trusted

August 14th 2009 04:28

Richard Smith, a British doctor and director of the Ovations program which fights chronic disease in the developing world, recently had breakfast in Bangladesh with an unnamed economics professor from Harvard University.

The conversation during the meal was hardly the mundane breakfast chat of the common man. What these two higher minds chose to discuss was the degree to which the findings of most scientific surveys around the world each year can be trusted.

The conversation started like this. "Economists pay no attention to what people say, only to what they do." It was the Harvard economics professor speaking, so he should know what he is talking about.

Dr Smith responded that he tended to agree. After all, he said, we all know that there is a big gap between what people say and what they do. "Consequently I’ve always been wary of surveys. The more I think about it, however, the more I think that we should ignore all surveys. Life is too short."

One can only wonder if these two venerable men had any idea what a dagger they were plunging into the heart of bloggers everywhere, for whom the results of surveys are a constant and rich source of material.

Whose opinion are we to trust now?
Source: BMJ Group Blogs

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Posted By: Chris Champion - Category: Consumer opinion, Economics, Human nature

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Changing Fortune 500

July 12th 2008 10:21

Goodbye Nike, hello China

Hello China indeed. Our heading summarises the 2008 Fortune 500 list, released last Thursday. The iconic sports shoe maker and eight other American companies fell off the list of the world's top 500 companies measured by revenue, cutting the American presence from 162 in 2007 to 153.

Japan provided 64 companies, France 39, Germany 37 and Britain 34.

Splitting the last two, with 35 companies, was greater China. With 26 mainland firms, six from Taiwan and three from Hong Kong, the Chinese presence was the biggest ever, and who can doubt that there is plenty more to come?

Before polishing off the crystal ball and having a peep at the future, it is interesting to have a look at the road, at times rocky and even harsh, which has led to a present where tens if not hundreds of millions of Chinese are wearing expensive western clothes and carrying expensive mobile phones in their designer pockets, and a future where it seems a question of when, not whether, China will take over as the world's economic super power.

Some people argue that China became the world's biggest economy years ago. This is because statistics, as we all know, can tell the same story in different ways. In simple terms, it can be misleading to say the average American earns, say, 10 times as much as the average Chinese, because that average Chinese wage has, in China, a much higher value than one-tenth the American wage. If we adjust the average wage figures to reflect local purchasing power, and if we then multiply our new average wage figures by the respective population of the two countries, it is easy to see how China can be said to be the world's biggest economy.

While it still has a little way to go in real terms, as the economists say, it interesting to consider that China has been the fastest-growing economy in the world for the past 25 years. Average gross domestic product growth in that time has been an astounding 10 per cent. Income levels have grown at 8 per cent per year for the past 30 years, and a 2005 United Nations report said China had lifted 250 million people out of poverty since 1980. Today, new millionaires in US$ terms are popping up all over the place.

It is not all good news, of course. Income disparity - the gap between the rich and the poor - is growing quickly and has been recognised by authoritative voices both inside and outside the country as a major problem. Some predict consequent social unrest unless the Chinese authorities find a way of reversing the trend.

The sheer scope of the Chinese economic revolution could have global consequences. In 2006, renowned American environmentalist Dr Lester Brown warned that China's growing prosperity in China threatened to place "intolerable" burdens on the world's natural resources.

Dr Brown bluntly claimed that, unless the world economy was fundamentally restructured, it would be unable to produce enough energy, food and other resources to meet Chinese demand.

Is this the future? Dr Brown said that, if it continued to grow at its current pace, China would by 2031 have a population of 1.4 billion, would burn 99 million barrels of oil a day (18 per cent more than is now produced globally), consume two-thirds of the world's current grain harvest, use twice as much paper as the world currently produces, and drive 1.1 billion cars, more than the world's 2005 fleet of 800 million, forcing it to pave roads and car parks equal to the area it now plants in rice.

"There go the world's forests," said Dr Brown

Is that the future? Our crystal ball has thrown hands over eyes and hidden itself under the pillow.

Footnote: For a full list of the 2008 Fortune 500, go to this link.

Sources: China Daily, cnn.com, wikipedia.com

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Posted By: Chris Champion - Category: Asia, China, Economics, Environment

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Celtic Tiger

July 8th 2008 10:23

Can someone tell me why European and other developed economies are not following the example of Ireland? I am no economic or political expert, but I don't understand how Ireland can transform itself, as it did, from a European backwater to one of the world's wealthiest nations, and no-one thought it worth emulating. If you do understand, and can shed any light on this, please, please, leave a comment below.

Meanwhile, if you are wondering just what this is all about, and just what Ireland did, let me try to explain

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Posted By: Chris Champion - Category: Economics, Europe, Ireland

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Consumer confidence

April 27th 1999 08:50

I lived in Hong Kong for 16 years until 2007. In 1998 and 1999 I wrote a series of political and social commentaries for a quirky institutional newsletter - quirky in that it was intended to be as much contentious, offbeat and humorous as it was informative. I was working as an editor, and I wrote the articles under the pseudonym Red Inque. I post them here for anyone interested in a look at life in Asia at the time, and in Hong Kong just after its return to Chinese sovereignty.

Tell me Dobkins: How long have you been with us – not counting today? -- David Frost (The Sack and How to Give It)

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Posted By: Chris Champion - Category: Asia, Hong Kong, Economics, History, Hong Kong 1998-99, Investment

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