Western brands are priced 30% higher in China (#98; Topic B)

Today's Wall Street Journal reports that "U.S. and Europe hope to narrow their huge trade deficits by getting the Chinese to buy more of their products." Noble goals. How? By pricing "their products 20 percent to 30 percent higher than in other markets." Why? "[P]artly to lend their products an added cachet in Chinese eyes, an important branding strategy in developing markets." What a strategy! So, the way to narrow trade deficits in China is (1) treat the Chinese consumers as suckers, (2) ram inflated prices down their throat, (3) ridicule their high savings rate and demand that they spend more, and (4) lodge official complaints when the first three strategems fail to work. Is the Chinese consumer really that parochial? That stupid? About 50% of goods sold in western-owned shops in China are manufactured in China anyway, where is the "cachet?" Is putting a western-brand cachet on a piece of garment produced in China making it a "western" cachet? Ikea, a Swedish-owned department store chain, seems to think differently -- its resident manager in China said: "Chinese consumers are the most demanding in the world" -- and compete in the Chinese market on the basis of price. What a refreshing thought! Of course, Ikea is a tough competitor, in China as in USA. May the more perceptive player win.
Posted at 11:42 am, Friday, March 3, 2006