Should small businesses be favored over large ones?

[rlg94086]

Wal-Mart (among others) does wield a fair amount of monopsonistic power, which is growing as they systematically put their competitors (i.e. other potential buyers) out of business.

Again, only because their suppliers have gone along. I’m sorry, but one company does not yield total power. Perhaps the suppliers will get a clue…some of them seem to be catching on.

 

[dacoobob]

My company is European, and we sell manufacturing equipment. China is our biggest market, and we compete against Chinese, Japanese and Korean manufacturers primarily.

So, while you are at it, consumedconvert, type in “1 Euro in RMB” and explain to everyone why we are able to be the number 2 supplier and very successful in that market. Hint: it isn’t always about price.

We were talking about consumer goods. Wal-Mart doesn’t sell manufacturing equipment in their stores. Your company happens to benefit by the current Chinese manufacturing boom (which is supported by the price gap).

 

[dacoobob]

Again, only because their suppliers have gone along. I’m sorry, but one company does not yield total power. Perhaps the suppliers will get a clue…some of them seem to be catching on.

A company doesn’t need a total monopoly to distort the market significantly. Neither does it need a total monopsony.

 

[rlg94086]

We were talking about consumer goods. Wal-Mart doesn’t sell manufacturing equipment in their stores. Your company happens to benefit by the current Chinese manufacturing boom (which is supported by the price gap).

Yes, but we compete against Chinese manufacturers. Do you think those manufacturers have higher labor costs than my European company??

There is little difference. When it comes to consumer goods, the only issue should occur if the Chinese manufacturer makes the product with the same or superior quality. Is that what is happening? If so, then it doesn’t match with the complaints people have against Chinese goods.

 

[consumedconvert]

Absolutely!
f quality goods that customers like to buy are available at a lower price, then the customer would be stupid to buy the same good at a higher price next door (unless that retailer is doing a phenomenal service job…but that is a different issue).

Unless the customer intentionally shops at local “small box” retailers in order to support his community and the small entrepreneurs daring to take on Wal-Mart, and unless he buys American when he can (wasn’t that the slogan of the eighties?) But of course not many people do, for a myriad of reasons.

Read The Man Who Said No to Wal-Mart*. *This CEO made the right decision.

Good article, thank you

You seem to think that the supplier should be focused on maximizing their sales at the expense of their quality, profit and their employees. Isn’t that the opposite of what you have been arguing?

hUH? I never argued that suppliers should focus on maximizing sales over quality or employees! My point was that it’s nothing like fair trade when Wal-Mart is able to rattle suppliers down almost below their costs, year after year, and them dump them when they get a chinese supplier (who is, as pointed out, heavily subsidized by a regime none of us are quite comfortable with). My whole point has been all along that US suppliers should not be forced into unfair competition against what amounts to a joint partnership between Chinese businessmen and the Chinese Government, particularly on Wal-Mart’s “lower the price or your out” terms.

If companies compete on Wal-Mart’s terms, they’re forced to forget about everything, including employees and quality, but price. And that’s when wages get cut and US manufactures reduce themselves to buying agents of Chinese goods.

Now, all that being said, it was the CEO that made the decision to sell at Wal-Mart. I guess with Wal-Mart the only winning move is not to play, as the Snapper exec decided not to play. I guess you could compare the situation to loans exceeding %50 interest. If a consumer gets himself into a hole by borrowing on those terms, it is his fault. But does that mean there should be no predatory lending laws?

The simple fact is that Wal-Mart and its ilk are simply to large, too powerful, and too scrupulous (simply meaning “without loyalties of any real kind”) to be comfortable with.

EDIT: un-scrupulous. It’s getting late in IL

 

[consumedconvert]

Type “1 USD in RMB” into Google and hit enter.

I’m currently in the belly of the beast as it were, working for a company that manufactures stuff here in China for export to the US. In my defense, though, our company isn’t here to minimize costs-- our founder and president was/is a Christian missionary, and we’re as much a ministry as a business. Many of our employees are former beggars, ex-Buddhist monks, or handicapped people (who have a rough time in China); and a hefty chunk of our profits go to various local community development and evangelization projects (the rest is reinvested). Because we pay our workers well and provide benefits, our costs are higher that a lot of our Chinese competitors’, and we have yet to get any contracts with the big guys like Wal-Mart of Home Depot.

If the Yuan were un-pegged from the Dollar, we’d probably go out of business, so I’m a little ambivalent on whether it ought to happen. Still it would probably benefit the US economy as a whole.

Sounds like you’re working for a good company.

I hope your company thrives; but a country’s got to protect its own citizens first, yaknowwhatImean?

 

[consumedconvert]

Again, only because their suppliers have gone along. I’m sorry, but one company does not yield total power.

Yet, and they’re getting too darn close.

 

[consumedconvert]

I would like you to explain the math problem you seemed to ignore.

Increased wages - increased prices = no net increase in purchasing power.

ANSWER: Increased wages - increased prices + my neighbor’s job + locally owned companies = perhaps slightly less buying power, but a heck of a lot more comunnity and humanity.

Again, distributists disagree with the long-held assumption that the primary purpose of an economy should be to continually expand buying power.

 

[consumedconvert]

What were we talking about again…? Oh yes, distributism. I’d never heard this word before reading this thread, but doing a little research (ok, mostly on Wikipedia…), distributism seems very close to what I’ve believed for a long time now. Well, chalk up yet another thing I’ve discoverd I agree with the Catholic Church on. I’m afraid I’m going to have to convert sooner or later…

No time like the present–Easter is approaching, you know!

In all fairness, distributism is based on Catholic doctrine as propogated by a series of Popes starting with Leo XIII right up to JPII. However, it has never been endorsed by the Catholic Church; the Catholic Church does not officially endorse any economic system or government (which is one reason Pope Benedict is able to attempt peace with the Chinese regime).

Among faithful Catholics who take an economic position, you’ll find (at least it has been my experience) that most are after the same basic things–social justice, as outlined by Papal encyclicals–though many disagree about how to bring about greater social justice, to what degree our society lacks social justice, and what effect proposed partial remedies would have on the economy.

That being said, many of us believe that distributism holds the greatest potential for bringing about a more just society in this fallen world, and that using fiscal policy distributing true ownership of capital among as many people as possible would dramatically help bring about a better society. Contrary to what some argue, distributism is markedly different from socialism, mainly in that the distributist’s goal is more widely distributed true ownership of property, thus helping citizens gain independence; not the abolition of property and the “Daddy” state, as in Socialism.

Unfortunately not all Catholics are distributists–not by a long shot! But most distributists are Catholics.

I recommend reading books by Belloc and Chesterton available from ihspress.com – particularly "The Restoration of Property by Belloc.

Peace of Christ!

 

[thomasf]

As a small business owner, I obviously prefer small businesses. However, it depends on the goods/services. I don’t want to buy a car from my neighbor Joe who builds cars in his garage with a small workforce on the evenings and weekends. I don’t want to fly on an airplane operated by Mom and Pop down on main street. But when it comes to buying groceries or produce or small things that can be purchased locally, I’m all about the little guy. I like when I can go to a business that knows who I am and I know them.

 

[vern_humphrey]

Interesting, this is happening all over the place. Just replace “government” with Wal-Mart or your favorite Big Box supplier, and change the industry.

To see where you’re wrong, ask yourself two questions:

1. What competitors does Wal-Mart have? (Hint: Sears-K Mart, Target, etc., etc.)
2. What competitors does the government have? (Hint: None.)

And we have to ask ourselves–why isn’t anything made in America (or, what’s more, our hometown or state) anymore? And what happens when China decides it doesn’t like us?

If China decides they don’t like us and cuts off trade, China will plunge itself into a depression, and we will start manufacturing more goods here – or in some other country.

We would have more goods made in America – if we hadn’t chased the minimum wage chimera. We priced American labor out of the market, with no other result than to accelerate inflation.

 

[Malcolm_McLean]

OK granted, partially. But I won’t take back the statement that the American consumer tends to be short-sighted. Short sightedness seems to be almost a national characteristic for us.

But should the American consumer pay for more expensive goods?

Let’s say I’m in the shipping business. I can buy a liner from an American company for 1 billion dollars, or from an Chinese company for 500 million dollars. However I know that if I buy from the American yard I’ll be able to buy another liner in five years time for 1 billion dollars. If I buy from the Chinese, I’ll have to buy in five years’ time for what they offer me.
It’s not an easy decision, but a strong case can be made for sticking with the American yard.

Now replace “liner” with “kettle”, and 1 billion dollars with twenty dollars. It’s the same argument - drive the American kettle factory out of business and who knows what kettles will cost in five year’s time. The problem is that my twenty dollars has no influence on its own. There is no way of buying a secure supply of kettles. So the only logical thing to do is to buy the Chinese kettle, even if in the long run it is bad for all consumers.