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Understanding Chinese Imports of Consumer Products to the US
Many folks in the United States complain that the products coming over from China are junk. If you ask an auto mechanic what types of tools they use, they will make a point to tell you that they will not use any Chinese tools. Why you ask? Well they will tell you because they break, they aren’t durable, you can’t take them back, and although they cost a lot less, they are a waste of money.
But before we trash on Chinese goods, or make light of the reality of these products, we should also remember that this is how the Japanese started out when they were sending products to the United States, and yet, today the Japanese cars are built just as good or even better than American cars. The unions obviously don’t want you to buy anything from China, because they want everything made and manufactured in the United States.
That makes sense because it provides jobs, but we live in a global economy, and we trade goods and services both ways. We can’t expect the Chinese to buy our Caterpillar tractors, Cummings diesel engines, General Motors cars, and Boeing aircraft if we do not reciprocate in trade.
Not long ago, I met a gentleman at Starbucks and we were talking about Chinese imported products – and how they were flooding our consumer markets. We both agreed that China was doing nicely and it was perhaps a good place to invest at least a percentage of your portfolio, due to their economic growth. We got on the subject of all the products that came over in all the shipping containers from China and he said;
“China doesn’t sell products in the US, they sell products to Wal-Mart.”
Indeed, this is the common perception, but it’s not true. Let me explain.
The reality is we see Chinese goods in every industry and if you work in automotive, you know that a good number of the parts come from China, and if you work in construction you know a lot of the materials come from China. And if you work in the restaurant industry, you know that a lot of the products that you use come from China. That’s just the way things are.
Additionally, you can go to just about any store, or any major retailer and there will be Chinese goods. You can go to any mom and pop store, and half of what they sell is made in China, or it’s made with Chinese components. Anyone that thinks it Wal-Mart is the only place that sells Chinese goods is kidding themselves, and they don’t understand the reality. Indeed, I hope you will please consider this.
Online Business, Selling Consumer Products
Ecommerce sales are growing day by day and it’s not since one or two years but it started happening a long time ago. I believe I received the first survey about ecommerce sales in 2003 and after that in 2004 that since 2001 ecommerce sales and eshopping started spreading like wildfire and over night people started presenting new consumer products and services. Leading Internet research firm Forrester Research predicts that total e-commerce sales in the U.S. will grow from $144 billion in 2004 to $316 billion in 2010. That is a huge number indeed and as we see the growth of online shopping market and more online business websites we also observe the new and improved consumer product quality.
The online marketplace is a great venue if you have products to sell (such as auto parts, antiques, jewelry, or food). Regular day life products from edibles to all useful stuff that you may have in your home is available online today and trust me when I saw everything I mean everything (even your door mats are available online). Internet and web has always attracted those looking for unique items or something customized just for them. This is why you find most unique consumer products online with more unique and attractive offers.
If you think you should also take your business online then you will need to take care of few aspects only and you are all ready to go online with all your consumer products and offers. It all starts when you start believing your products and your business. Consider taking wares online if one or of the things that I will discuss now applies to you. Go online with your business if you think you have high quality products. If you are creating you own products, for example designer dishes, make fudge, or sell gift baskets of wine you definitely have the idea of its quality. You may also sell regional foods such as Chicago deep dish pizza or live lobsters from Maine. Ice cream may not be good because it will melt and you will may orders from geographically far located locations.
I have seen a lot of online business with entrepreneurs just like you, and I love their websites as well as their consumer products. Many such people offering food items give unique flavors and high quality in their food, as well as personalities and business standards.
Changing Consumer Spending Habits
An economist once told me that the factual “story” behind any economic report or event is almost entirely based on sociology, the study of how human society actually operates and reacts to outside actions. It is certainly apparent that when the economy is either “booming” or “busting,” the spending habits of the global consumer normally change dramatically.
Those who watch our national economic situation know that our nation’s economic foundation is based on whether the American consumer is in a spending mood; two-thirds of our national economy is based on whether the public is willing to spend their hard-earned dollars at the nation’s retail centers, car dealerships, or within the service industry sector. But when things start to go bad, as they have over the past 18 months, spending habits can change drastically, damaging the economic infrastructure until consumer confidence finally starts to mend.
There are some economists and business leaders today who believe that the current global recession has not only forced consumers to prioritize their spending habits but it may have changed the consumer consciousness to the point that American businesses will have to determine whether or not they are dealing with a customer base with an entirely new spending attitude. Some business leaders believe that is the case.
The CEO of the J.C. Penney Company recently gave an interview to voice his concerns about today’s shifting consumer behavior. Myron Ullman recently said that the U.S. consumer has a lot of anxiety and is very concerned about how upcoming changes in healthcare may affect their finances in the immediate future. He continued by saying that consumers are suddenly coming to the realization that “they may need to save more than they had originally planned. Their spending habits have changed to reflect this for the foreseeable future.”
He’s not alone; the corporate leadership of Best Buy, Drugstore.com as well as CEOs from the service industry (Hotels, Theme Parks, Restaurants, Rental Car Services) are all starting to realize that the U.S. consumer may never return to the spending habits of the past and that a change in their selling and advertising strategies might be necessary.
While people will continue to consume, they question now is what will they buy, when will they buy and where will they buy. Name brand products are taking a backseat to generic or store brand items. Malls are beginning to show signs of weakness – more and more stores are closing while consumers make their way to other, cheaper alternatives. Instead of going to one of the major mall’s “anchor stores,” they are now heading to places like Wal-Mart, Target or K-Mart to purchase the things their families “need” rather than the things their families “want.”
The economy is beginning to show signs of life for the first time in many months. Consumer spending was up in August by the most since 2001, indicating the biggest part of the economy is starting to rebound from its worst slump in almost 30 years. The 1.3 percent increase in purchases was larger than forecast and followed a 0.3 percent gain in the prior month that was bigger than previously estimated. By the way, incomes were also up at a 0.2% rate.
While all that may be true, the level of consumer confidence continues to be the key question. As I mentioned earlier, economics is all about sociology and until the American consumer starts to feel more positive about spending their money at the “corner store,” restarting the U.S. economy will just have to wait.