Japanese importers profiteering by exploiting devalued Yen

Started May 17, 2013 | Discussions thread
Chad Gladstone
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Re: Profiteering is a strong word
In reply to bflood, May 19, 2013

bflood wrote:

You are operating on the assumption that all disadvantages of currency value are to be shouldered by the manufacturer, and any benefit from a change in currency value must be forfeited by the manufacturer to the customer, and if this doesn't happen, the manufacturer is cheating the customer.

Aside from your oversimplification of basing everything on only the change of the yen vs the dollar, bear in mind that the change in the yen is a recent phenomenon and if you as CEO of Nikon ordered product prices in the US to be adjusted to reflect the drop, you've be out of a job immediately. A multinational corporation never adjusts prices on short term changes - they will want to wait and see if the currency value remains stable at the new value.  Otherwise, changing prices now followed by a return of the previous currency value forces the company to either lose money on product sales or to RAISE PRICES back to what they were, something no company wants to do.  If you don't believe it, feel free to cite an example of a company that has done just that.

Oversimplification aside, I am suggesting the importer, not the manufacturer is potentially realizing gains due to currency fluctuations that are not being passed on to the consumer.  I am neither presupposing that Nikon, the manufacturer, is raising or lowering prices wholesale prices but rather, whomever is importing the Nikon goods and paying with an appreciated foreign currency can do so at a lower relative cost without the manufacturer shouldering any additional risk or reaping any additional benefit.  The run is too short to indicate how the manufacturer will react if the currency remains devalued for a protracted period, but at least in the short run, anyone who purchases wholesale goods with a higher valued foreign currency would (at least in the most simple terms of economics) expect to pay less than they would have prior to the devaluation.  Nikon's strategy to hedge against such speculation is an interesting discussion, but beyond the intention of the original proposition.

I am just not catalyzing the type of discussion that was anticipated because many are transmogrifying the manufacturer (Nikon) into the importer or subsidiary (Nikon USA, or whatever firm is potentially receiving the windfall).  I am not suggesting that Nikon should, would or has a duty to sell their products at any other price than they deem appropriate, nor am I interested in exploring the long term impacts of the devalued Yen.  I am only posing the possibility that somewhere in the supply chain, the currency rate has a demonstrable impact and that impact has not rippled its way back to the foreign, retail consumer.  There is no conspiracy to report.  However, if the Yen continues to remain devalued and imported Nikon goods maintain the same retail prices in countries with higher valued currencies than was the case when Nikon set its wholesale prices, I expect to see a return of grey market imports by enterprising capitalists.  This is just an observation, not an attempted analysis of supply side economics.

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Chad Gladstone

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