Posted by: nickgerlich | July 1, 2008

Whirled Market

Back in the late-70s, I witnessed firsthand the biases people can hold against products from certain countries. I had just bought my first car, a ’79 Toyota Corolla. I was going to Anderson University in Indiana. Anderson was a General Motors town, with two large plants employing thousands of blue-collar workers.

At the time, unemployment was running over 20% in this town, inflation was rampant, and people were scared. So, quite naturally, they took things out on the nearest threat, which at that time was Japanese cars.

Fortunately, my car was never bashed by a disgruntled auto worker, but I didn’t sleep well my last two years there. Especially my senior year when my apartment was right around the corner from the union hall.

importsCountry-of-origin effects are nothing new. People have always been afraid of goods brought in from other countries, because they fear for their very job. Tensions really mount when the imported good enjoys significant price, quality, and/or performance advantages. And at the time, Japanese cars were all the rage because they were cheap, ran forever, and got great gas mileage.

Today we have come to accept Japanese cars as a way of life. Numerous manufacturing facilities have been built stateside by Japanese automakers, mostly in response to the so-called “voluntary” quotas imposed on them in the 1980s. They skirted the quotas by building factories here, and hiring non-union workers. Today the Japanese hold about 35% market share of US vehicle sales, and Toyota is the number one automaker in the world.

The focal point today is just a little farther west. Or is that east? It makes no difference, because the nation is spelled the same regardless how you get there: China.

In the last year China has taken a lot of heat because of lead paint, lax pharmaceutical standards, and tainted dog food. But we continue to import goods from there by the boat load. The only things that could ever put a halt to this would be continued erosion of the dollar or increasingly expensive petroleum. But until then, “Made In China” will continue to be three of the most common words we see.

It’s funny, though, how venue can affect our perception of imports. Critics of Wal-Mart say that the venerable retail giant is the biggest contributor to American job losses. Some shoppers look down with scorn at all the cheap imported goods. But right around the corner at stores like World Market, being an import is actually a good thing. Just try to find American-made goods there (other than their beer and wine selection). No, nearly everything is imported, a veritable global bazaar of non-perishables. Marco Polo could have saved himself a lot of bother had this store been in his neighborhood.

So how is it that country-of-origin is a big deal at one store, but a sought-after quality at another? Good question. If you find the answer, let me know, because this is one of the great inconsistencies in American retailing.

My cycling buddy recently commented while out on a long ride that, if he changed his drivetrain over to SRAM products, his bike would be completely made in the USA. The titanium frame. The lightweight racing wheels and spokes. The carbon fork. Even the tires. OK, the innertubes probably came from Taiwan or China, but you can’t see them.

But unless you are on a mission, it is exceedingly difficult to buy an American-made bike. Most lower-end models are made exclusively in Japan, and probably contain some Japanese components. Most quality bikes may have a US-made frame, but will contain parts from Japan, Italy, Germany, Switzerland, and France. It may or may not be assembled here.

That’s quite a global product for such a simple concept.

My point (and I do have one) is that our biases against countries stem mostly from our fears of the unknown. We have come to know and embrace products from Europe and Japan, but we still just don’t know much about the Chinese yet. Bad PR doesn’t help matters. But the truth is that the Chinese are very close to exporting cars to the US, and they already make a wide variety of things most people would never consider: musical instruments, most laptops in the $600-700 range, refrigerators, TVs, microwaves, and more. China has become the industrial sector for the world.

As for my college town, those two GM plants closed down little by little in the last 25 years, and have now been demolished. Those jobs are gone forever, and the population has shrunk by 25%. Ironically, one of the state’s biggest Toyota dealers is right there in Anderson, testimony that attitudes can and do change.

But I tell you what. I would be deathly afraid to drive a Chinese-made car through Detroit anytime soon. That would be like asking for whuppin.

Dr “Free To Choose…But Choose Carefully” Gerlich

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