Japanese importers profiteering by exploiting devalued Yen

Started May 17, 2013 | Discussions thread
Eamon Hickey
Veteran MemberPosts: 3,161
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importers are subsidiaries in most cases
In reply to Chad Gladstone, May 20, 2013

Chad Gladstone wrote:

This may definitely be the case.  I an not referring to the Nikon company, only those who imported goods from Nikon and other Japanese manufacturers and purchased those goods with foreign currency.

In every major market in the world, the Nikon importer is a wholly-owned subsidiary of Nikon Japan, and each subsidiary's financial results are merged with the parent corporation's (that's Nikon Corp.) financials. This is what the word "consolidated" means in Nikon's (and any other company's) financial reports: subsidiary financial results are "consolidated" with the parent company. The same is true, with slight variations, for all of the other major camera companies.

So Nikon Inc. (that's Nikon USA) is owned in total by Nikon Corp. (Nikon Japan), and if it makes a profit or loss, those results are shown on Nikon Corp's financial reports.

It's certainly true that Nikon USA is now paying less for the products it buys from its Japanese parent company. And it's also true that Nikon USA might simply pocket that windfall (and then, in effect, "send" it to Nikon Japan since they own the pocket.)

But the standard way of lowering prices to consumers when the yen's value falls is to offer rebates. This is safe because if the yen recovers, which it always has in the past two decades, the rebates can simply be ended.

If, however, Nikon USA becomes convinced that the yen's devaluation will be long lasting, you probably will see some (not all) list prices get reduced because lower prices are more effective than rebates in spurring sales.

Lowering prices is a huge logistical problem, however, because existing stock in the retail sales channel has to be price-protected -- i.e. Nikon USA has to refund the price difference to stores like B&H for every item that B&H bought at the old, higher price and still has in inventory. Very complex and time-consuming process. Because it's so difficult, it's not undertaken unless there's a really strong reason to do it.

Secondly, if the yen turns around and gets stronger again, Nikon USA would just have to raise prices again. That's not logistically difficult, but it has a negative marketing effect.

Those two factors work against straight price reductions and in favor of doing rebates.

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