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Dumping: In economics, "dumping" can refer to any kind of predatory pricing. However, the word is now generally used only in the context of international trade law, where dumping is defined as the act of a manufacturer in one country exporting a product to another country at a price which is either below the price it charges in its home market or is below its costs of production.
I don't see any mention of retail price or out-the-door pricing. But good attempt at twisting the meaning.
Maybe you should let the Alabama and other states know about the definition of coated papers and list pricing being relevant?
2014 Malibu 2LT, 2015 Cruze 2LT,
I agree!
I was looking for a smallish car in the very early 70s. I really liked the small Datsun
sedan. It was a basic stripped down model , no AC, no power anything, and straight shift. It was quick and nimble and just fun to drive. But money was tight so I settled for a basic Pinto, which was considerably cheaper.
It was an okay car for it's time, though dull to drive and had some engine tuning issues that I was told I would have to learn to live with. Best MPH I got was 21+/-
driving 60-65 mph. And it had it's share of failures that anyone acquainted with D3 cars thought to be perfectly normal. So it spent it's fair share of time in the dealers service dept..
Seems I traded Pinto for the basic Subaru that a friend talked me into. That was the first car I ever owned that did not require anything other than routine oil changes and such. It had a sticker price about the same as something else (D3) I was considering. But the D3 dealer would "DEAL" and the Subaru dealer would not.
So the Subaru cost more and well worth it to me.
Kip
Kip
I don't see anything in the Wikipedia entry that contradicts my POV.
Maybe you should let the Alabama and other states know about the definition of coated papers and list pricing being relevant?
I deliberately ignored this because it's about coated papers - not cars. We're supposed to be discussing cars here.
Incidentally, that Wikipedia article that you brought to my attention contained a link to this excellent piece by the late libertarian thinker, Murray Rothbard. He asks this question: why ban dumping if it's good for consumers?
Protectionism and the Destruction of Prosperity
Note what he says about "dumping":
...historical investigation has not turned up a single case where predatory pricing, when tried, was successful, and there are actually very few cases where it has even been tried.
Precisely. I remember all the talk about Japanese car talking but no actual charges and certainly no convictions.
It's more of a defend the old Big Three at all costs - even the truth!
Dumping: In economics, "dumping" can refer to any kind of predatory pricing. However, the word is now generally used only in the context of international trade law, where dumping is defined as the act of a manufacturer in one country exporting a product to another country at a price which is either below the price it charges in its home market or is below its costs of production.
I don't see any mention of retail price or out-the-door pricing. But good attempt at twisting the meaning.
I see no attempt to twist the meaning.
Ultimately, for the practice of "dumping" to work, the product being "dumped" must be bought. And, its pretty clear that the products (cars) being "dumped" were being purchased at a premium price over the domestic offerings (and don't forget Henry Ford II's famous remark "Small cars mean small profits").
Certainly, "dumping" would imply the "dumped" product was/is being sold at equal or below the going domestic price. And, having also being around in those years, I can attest that the import models weren't the high-line and luxury models we see today. For the most part, they were basic, no frills models. Even the first Datsun/Nissan 240 Z had few options.
So, in the end, its extremely difficult to maintain (factually, anyway) that the cars were being dumped....Unless, you also wish to claim that any imported item being sold in the US successfully is also being "dumped".
Of course, you're free to post any supporting evidence to substantiate your claim.
http://news.xinhuanet.com/english/2009-09/13/content_12045618.htm
From the article...
BEIJING, Sept. 13 (Xinhua) -- China launched anti-dumping and anti-subsidies investigations into some automobile and chicken products originally produced in the United States, the Ministry of Commerce (MOC) announced on Sunday.
The probe follows complaints from Chinese manufacturers. They alleged the above products entered the country's markets with an "unfair competition manner", which harmed domestic industries.
The ministry said the investigation was in accordance with the World Trade Organization rules and China's laws.
Opening that Pandora's Box was the worst mistake in postwar history.
The best deal, as well as personal preference/needs.
Overall, a well thought-out analysis of the situation.
Automaking is truly a Global business for any carmaker with any volume.
Didn't buy anything but Saturday was a great day for test driving!
Really? I'd always heard that the early Camry, and many Japanese cars of the time, were pretty expensive, and often sold above MSRP. I have a Consumer Guide from 1985 that tested a Camry. MSRP came out to $14,058, but in the review they pretty much said good luck getting one for MSRP. The same issue also had a 1985 Pontiac Parisienne, and while they didn't mention what its MSRP was, the review said "The Parisienne is literally a lot of car for the money, and a nicely equipped one shouldn't set you back more than $14-15K"
FWIW, my grandparents bought a loaded '85 LeSabre, for something like $16,200, out the door. As for cars in the Camry's league of the time, I think the Aries/Reliant, Tempo/Topaz, and Cavalier and its clones were more like $10-11K, nicely equipped. Heck, my grandparents on my Dad's side of the family bought a new Ford LTD that year, the smaller Fairmont-based one, and I think it was only around $11-12K. And it had power windows, locks, seats, etc.
Now, I'll say a Camry was a lot more car than a Reliant, Tempo, or Cavalier, so yeah, you got more car for your money. Maybe the more low-end Camrys were a lot cheaper, though? I'll have to find that old Consumer Guide, and see what they base priced for.
Even worse!
The why was Toyota so successful until recently?
Let me guess, was Robert Goulet on at the time? :P
I think the tv in my living room is a Samsung, but not sure. It was a replacement model for another tv that had crapped out under warranty, but was no longer made, so they substituted this thing. I don't have any complaints, although it is a low-end model. So was the first one, though. I think the first one was a Hitachi? It died when one of the cats projectile-vomited off the staircase and coated the back of it and shorted it out. Yes, believe it or not, the warranty covered it!
Investigator: "What killed him?"
Coroner: "The pages of his 'Sports Illustrated!'"
I'd probably buy a Samsung before I bought another Sony or a Panasonic.
That's true. When I bought a new Accord LX hatchback in 1981, I managed to get a small ($250) discount from sticker ($7600), but only because I wanted a stick.
I would have paid MSRP for the same car with an automatic & over MSRP for the 4-door Accord sedan, which was very much in demand at the time.
Agreed. Guests rave about our 40" Samsung's picture quality.
OK, but using your example, if the Pinto was $2500, and the Corolla was $2800, But it cost Toyota $3000 to build and ship here, wouldn't that be "Dumping", as Toyota was losing $200 on each sale.
And, they are the largest flat-panel TV producer, so your brand "x" TV may indeed have an LG display.
http://www.lg.com/us/about-lg/corporate-information/overview/history.jsp
I have a 42 inch Panasonic 720p plasma in my basement "cheap and dirty" 5.1 system. It looks pretty good on most SD and HD source material. The primary user is my son, who plays his xBox 360 on it and also streams movies.
I do have a Samsung BDP in my main 7.1 system. No complaints, but I'll eventually move it to the basement and replace it with an Oppo unit.
Mine: 1995 318ti Club Sport-2020 C43-1996 Speed Triple Challenge Cup Replica
Wife's: 2021 Sahara 4xe
Son's: 2018 330i xDrive
According to what I was taught when I last took an economics class many moons ago, no. In all of the examples that we studied, the final retail price determined if a product was or was not being dumped.
That makes sense. In classic economics, the dumper supposedly uses price as a weapon to expand market share. If a company can achieve the same results in other ways - by establishing a reputation for having a better product so that customers willingly pay more - then it would be just plain dumb to needlessly leave money on the table.
In any case, as a small government libertarian/conservative, I'm strongly opposed to all so-called anti-dumping laws. If you want to sell me your product for less than it cost you to make it, you should be free to do so - no matter where your factory is located. Any contract between 2 consenting adults is solely the business of the parties to the contract. No one else - certainly not the government - has any right to butt in. Some of the resident socialists here might disagree with this, but to me that's as obvious as saying that the government has no right to tell me what to read.
What's the difference really? We pick up a big chunk of their defense costs while they play with their currency, borderline dump and severly restrict US imports. No free trade in Korea or China for American companies. Samsung makes a nice TV, but so does Toshiba at a similar or lower price.
Right, until your job is affected. Or do you work for government and not have to worry? Seems to me if you are true to your theory then you should be opposed to doing business with countries that won't let the US have a fair shot at their market, dumping or not. One way streets often dead end. If both markets are truly open and free, then I might actually agree with much of your position. So do you also feel China has the right to steal intellectual rights from firms like Microsoft or GM?
Well, there are a couple things here. First, I think the bigger point isn't what the car sold for, as that is a supply and demand thing. But if Toyota sold the car to the dealer for less than it cost to make and ship, that could be construed as dumping, as we never really purchase our cars from the mfr's.
Second, we have anti trust laws here for a good reason. If the "2 parties" enter into a contract ( say buying a television ), and the new electronics store is selling their goods below cost for the sole purpose of putting the squeeze on the store that has been in business in that area for years, that is disingenuous. Party #1 (the store) is using profits from established stores to subsidize the loss at the new store. Party #2 (the consumer) has only a loyalty to his/her own pocket book. Ultimately if the new store can put a hurt on the old one, they may be able to gain a foothold in that market they otherwise wouldn't have gotten. Is it legal??? Maybe. But that is a question for the attorney general to answer. Ultimately, you could end up with a scenario where there is only the newer store in town, and they ultimately can name their price.
That is why they broke up Ma Bell.
Could the Gov't have broken up GM 50 yrs ago?? I suppose it was a plauseable scenario if GM tried to muscle one of the other 2 of the big 3 out, or try to buy Chrysler or AMC. Let's use that scenario GM enters an agreement to buy Chrysler in 1962. I'd bet the ONLY way that happens is if they divest themselves of some holdings ( say Allison, GM diesel, or Hydramatic or Delco). Otherwise the Gov't, yes THAT Gov't, WILL butt in and say "I don't think so"
But that would've been then, when a combined GM/Chrysler would've owned at least 2/3's of the market. Today, not so much an issue as it would be less than 30%.
Nope, although I'm not sure what that has to do with anything.
Seems to me if you are true to your theory then you should be opposed to doing business with countries that won't let the US have a fair shot at their market, dumping or not.
Who determines what counts as a "fair shot"? Some GS-15 bureaucrat? A union boss?
A few years ago, a frequent pro-union poster on another Edmunds forum argued that all German cars were dumped on the U.S. market because their manufacturers didn't have to pay for employee health care - the German government provides that. When I asked him if he would consider a $120K Mercedes-Benz to be an example of dumping, his answer was yes.
Do guys like him get to make the "fair shot" determination for me? Or are you willing to allow me to make that decision for myself? If so, then we have no real argument.
So do you also feel China has the right to steal intellectual rights from firms like Microsoft or GM?
No, I don't. But intellectual property disputes are an entirely different issue from dumping. One can be against anti-dumping laws, as I am, & in favor of enforcing intellectual property rights, as I also am. The 2 issues have nothing in common.
Incidentally, my copy of Windows 7 was legally purchased from Microsoft.
As Murray Rothbard points out in this excellent piece:
"There is yet another problem with the charge of "dumping," even when it is made by economists or other alleged "experts" sitting on impartial tariff commissions and government bureaus. There is no way whatever that outside observers, be they economists, businessmen, or other experts, can decide what some other firm's "costs" may be. "Costs" are not objective entities that can be gauged or measured. Costs are subjective to the businessman himself, and they vary continually, depending on the businessman's time horizon or the stage of production or selling process he happens to be dealing with at any given time."
Second, we have anti trust laws here for a good reason. If the "2 parties" enter into a contract ( say buying a television ), and the new electronics store is selling their goods below cost for the sole purpose of putting the squeeze on the store that has been in business in that area for years, that is disingenuous. Party #1 (the store) is using profits from established stores to subsidize the loss at the new store. Party #2 (the consumer) has only a loyalty to his/her own pocket book. Ultimately if the new store can put a hurt on the old one, they may be able to gain a foothold in that market they otherwise wouldn't have gotten. Is it legal??? Maybe. But that is a question for the attorney general to answer. Ultimately, you could end up with a scenario where there is only the newer store in town, and they ultimately can name their price.
I'm not sure what your point is. In your earlier post, you brought up anti-dumping laws. Now you're bringing up antitrust law, which is another animal entirely. For one thing, anti-dumping laws apply to foreign firms, while antitrust laws usually (but not always) apply to U.S. firms.
The example that you cite is almost certainly legal under existing statutes. For one thing, no law is broken if the company doing the "dumping" is a U.S. firm. It's perfectly legal for, say, an Alabama company to take advantage of its lower labor costs & "dump" cheap goods into the Rhode Island market.
As far as antitrust law is concerned, your example is weak. The Justice Department, which enforces antitrust laws, would turn down this case, saying that you can always drive to the next town or buy your electronics from Amazon.com. That's why the Justice Department rarely goes after retailers. Most of its targets are manufacturers.
Some of this stuff is so egregious that it doesn't take much brain work. Of course, some of this Asian stuff is also very low quality, if not dangerous as well. But I guess its fair that they also poisoning their own citzens too. Personally, I think China is going to pay for how they are destroying their environment over time.
You've certainly got the right to purchase what cost the least in this country without considering origin. However, I look at other factors as well and I'm not really pro union. I do think a country needs some industrial base though if it is going to thrive over time. Unfortunately, you generally can't produce the lowest cost and pay a decent wage. Some posters almost sound like they are cheering for American companies to lose.
Then. please explain Wal-Mart. Or any ultra-large retailer, such as Bass Pro Shops.
That is why they broke up Ma Bell.
Having worked in Telecom in many capacities from the breakup of "Ma Bell" until 2000, I can attest that is a gross over-simplification of why the company (AT&T) was forced to divest itself of its local service providers.
If you do much reading beyond what is produced with a US slant in it, you can see some of that change already taking place.
As I've said before, manufacturing can be an extremely dirty (and at times, poisonous) business. Its a topic that many neglect when discussing why we are shipping some manufacturing processes overseas.
As an example, electronic manufacturing is highly polluting, and that's a big reason that basic electronic components (memory chips, etc) have been outsourced. If a country is willing to pollute its environment in order to gain production capability, there's always someone (US or other 1st world company) willing to help them in that endeavor.
Personally, I don't think that particular aspect has been examined sufficiently in the discussion of "free-trade".
But, back to the point.... China is starting to see the effects of this past behavior, and as the middle-class rises there, the Chinese people are demanding changes to stop wholesale neglect of the environment. Its slow, but it IS happening.
Frankly, if you don't see the difference, I doubt anyone could adequately explain it to you.
Do you honestly believe Japan doesn't use manufacturing facilities located in S. Korea as well as China?
As for Toshiba...
http://www.semicon.toshiba.co.jp/eng/profile/omc/index.html
Toshiba Semiconductor (Wuxi) Co., Ltd. (TSW)
Location
Building NO,29 Block No,52. Wuxi High-Tech Industrial Develoment Zone Wuxi Jiangsu China
Established
July. 28, 2002 (2002.07.28)
Paid-up Capital
24.1 million US$
Area
3,100 sq.m.
Employees
459 (as of 2004)
Products :
Transistors
Diodes
General Purpose Linear ICs
Yes, but would it be legal for the Ala. company to sell their product for a price that is far below it's "costs", subsidising the "loss" here with profits from a market where they are more established?
That's how companies frequently enter new markets, & it's perfectly legal.
Think about it for a moment. Do you really want the Federal government to investigate every business transaction to determine if it violates some hazy notion of fair pricing? Commerce in this country would slow to a crawl, while the government would balloon to 10 times its current size, which is more than big enough.
You probably don't, but that's what you're suggesting, intentionally or not, when you wonder if it's legal for a new player in a particular market to charge lower prices. Taken far enough, that thinking would make it just about impossible for anyone to start a new business, since lower prices are one way that a new business builds market share.
Plus the Supreme Court ruled that the price-fixing activities of the National Recovery Administration were unconstitutional back in 1935.
Let THEM breathe that air, maybe they'll lose a few hundred million of them...
Are there any ADR stocks on the NYSE for Chinese funeral homes???...
Comparing business in one first world and more or less responsible area to the other (like Alabama and Rhode Island) is so insanely different from comparing dealing with China vs the somewhat responsible world that words can't describe it.
I think we're talking about different perspectives. I've previously noted that it is difficult to avoid buying things made in China. I'm more looking at a personal preference to go against their governments. The Toshiba and Samsung may both be assembled, or have major components from China, but Samsung is HQ in Korea and I don't like some of the things their government does, so I'll buy the Toshiba. I'm mellowing a bit on Korea though as Hyundai and Kia are building plants in America, and the current Korean government seems more attuned to modern business practices and more open imports, and global issues like Iranian sanctions. If that government attitude stays in place I will start viewing Korea more like Japan.
As for China though, I have major concerns about their government:
1) They manipulate currency and prop up their home businesses while discriminating against imports and stealing intellectual propertry to give them unfair trade advantages.
2) Too much of their stuff still seems to have quality issues that are sometimes even harmful and dangerous.
3) China is forging strong relationships with countries that are openly hostile toward the US and looking to damage our country and its citizens. I may be able to understand Venezuela. I don't think its really about oil because when you add in the distance and the special refining equipment and costs for their heavy crude China probably loses money on it. Rather I believe it is their [non-permissible content removed] for tat against our Taiwan policies. But Iran and North Korea are a different story. China has enough clout to muzzle North Korea, but instead supports them strongly. There is plenty of oil available beyond Iran. I have to view those Chinese relationships as anti American pure and simple.
LCD TVs are like camcorders in the 80's. Only a few plants make the glass. Honestly I don't understand why consumers pay a several hundred dollar premium for many of the status brands any more?
I think the issue here is really incremental pricing and loss leaders versus predatory pricing. Predatory pricing is essentially deliberately taking large losses to wipe out competition rather than just aggressively pricing to gain market entry. It can only really be accomplished by someone with huge financial pockets or government support. I think some Asian firms have tried predatory pricing in areas like steel with the help of their governments. Predatory pricing destroys competitors and their jobs whereas loss leaders and incremental pricing just sharpen the competition. I can't believe any American would openly support foreign predatory pricing. You are just gaining some short term cost savings (which will rise rapidly after the competition is destroyed) at the longer term expense of your own industrial base. Ultimately the resulting impact on jobs and overall US wealth hurts the overall economy. If deflation occurs it usually hits your savings and investments harder than the resulting price decreases. So do I want the government involved in all pricing - definitely not, but I do expect the government to fight unfair foreign government supported predatory efforts that ultimately hurt our own country and its best long term interests. Foreign government supported predatory pricing efforts are really a dorm of economic warfare in my opinion.
Someone talked about pricing and Walmart's success. While Walmart aggressively negotiates pricing from their vendors, I don't believe they do it in any illegal manner. Actually Walmart profits come as much from their smarts, innovation and operational efficiency in things like supply chain and energy management as from vendor costs. I think Target is probably actually a stronger company than Walmart on the merchandising side of the retailing business.