Fix Price-Fixing
Posted : November 14, 2008 at 2:04 am [IST]
I get reminded of Noida’s Sunday market. Every vendor echoes the same price that they decide before the start. It is usually many times higher if consider the wholesale price that appears in media everyday or the price that a farmer sells for.As it appears they fix up prices as per the paying capacity of the customers.
While in US, I now think that the ‘Nano’ concept of Ratan Tata regarding the price of cars can never work. Though Mini Cooper may be a car liked by many, the price for the customer will be about the same as one for Toyota Corolla or Honda Civic. Auto manufacturers or for that matter the manufacturers at large work on old principle of keeping the margin of profit very high. They prefer to manufacture and market products that can provide a maximum margin. That is the reason behind the popularity of SUV/ MUV in US.
And to get the maximum return, the manufacturers may get into unholy cartel too. It was clear from a recent judgment. According to a verdict of the Justice department, “Prices for the flat screens in televisions, personal computers and cell phones have plummeted in recent years — but the decline would have been even faster if it hadn’t been for an international price-fixing cartel.” Three leading flat-screen producers — LG Display of South Korea, Sharp of Japan and Chunghwa Picture Tubes of Taiwan — pleaded guilty and agreed to pay a total of $585 million in criminal fines for their role in fixing the price of liquid-crystal display panels.
And that is the reason that the Chinese are capturing the market through their disruptive cost innovations, where they offer almost same quality or perhaps sometimes better at half the price. It for the Chinese that DVD are available at $40 an so are the many gadgets that are making your life better.
India manufacturers must emulate the disruptive cost innovations to compete in manufacturing sector that can save the country.
- Indra
Category: IRS in US 2008 |
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