State Supported Anti-Competition

Below excerpts from Nikkei Asia Review, “The lower prices from Chinese rivals forced Japanese manufacturing out of production. Panasonic’s solar cell and panel business has been in the red.”

As I see, this is a generic “anti-competition” model adopted in China. Ideally, under the WTO, state subsidies to produce a product below the market price and pushing it into virgin markets is strongly discouraged. Anti-dumping, however, is tied to the promotion of subsidized products. However, here lies (lie, no pun intended) the caveat. Only if “subsidy is proven”, thus transparency and audits are key to this. Both of which are lacking with China.

“Solar Cells” are not the only industry that is under threat. Almost all manufacturing, irrespective of the country of origin or the customer base, are under this threat. Over the years, they lose to Chinese competition. The mantra is clear, mass-produced under low (state-supported) cost, building obsolescence into the design and selling irrespective of the profits while booking the losses from the CPC Govt.

Buy Locally, Sell Globally
China is a nemesis to global manufacturing. It will not be surprising if we all lose the ability to do so. Individually, we lack the spirit to see this when we choose to buy cost-optimized products, and collectively, we do not have enough policy safeguards because we (most) are signatories to the WTO Open Market policies.

Buy Locally, Sell Globally
Mantras are good but let me ask you, how often have we gone to the Produce Market to buy vegetables without selecting the produce/vegetables? I know my behavior; when I select Okra (ladies fingers) or Egg Plant (Brinjal), I have been a nasty picker. I like unblemished fruits, absolutely fresh and lustrous, and yes, picturesque. When I buy a product, I see the price to value ratio, never realizing obsolescence or the country of origin. Price matters to me. I bring it home, and after using it, it breaks down. Later, I compare that with some of the equipment that my father bought – the Usha ceiling fan, which lasted 45 years, or the Allwyn fridge, that lasted until rust took over. I was born in that generation where obsolescence was there but not progeria, a fast-aging design element. I feel defeated, but despite, I start my purchase journey almost similarly, frustratingly repeating exactly what I did.

Why blame China?
Let me say it is fruitless to blame China since there is an entire supply chain that benefits from exchanging hands. From those wholesalers, logistics, and finally the outlets. Yes, let’s include the taxes (local, state, and federal). Who would want their coffers empty? No one complained because they all are benefitted. At least I expect someone to take a bird’s eye view and realize the revenue drain that ultimately empties the countries coffers.

Cess for Local Manufacturing
Before we understand the local cess model, let’s visit “Cash for Clunkers” under the Obama administration. When Barack Obama took office, the US was a major importer of fossil fuel. A lot of dollars were landing in the OPEC countries ultimately as Petro-dollars. Apart from under production, a major root cause was bad cars, called Gas Guzzlers, with dismal mileage. I witnessed several such cars in the countryside, where the owners could not get rid of their Gas Guzzlers because the cost for a better car was not affordable compared to the daily difference of costly gasoline. Remember at one point. Gas was four dollars a gallon. This swath of massive countryside drivers collectively contributed to this enormous dollar outflow to OPEC. President Obama gave incentive for buying a better car in lieu of the Clunkers. The Clunkers were scrapped, thus removing a massive source of outflow. Of course, horizontal drilling and fracking provided additional opportunities to tap untouched reserves. Within a few years, the US became a major Oil exporter.

Cess is not a tax, Cess is promoting and remodeling behavior. Cash for Clunkers is an ideal example of understanding to build Cess, and not tax indiscriminately creatively. To a gullible administration, imposing a tax is a simple noncreative solution. To a creative mind, root cause analysis and fixing the causative contributory factors is solving the problem. Executive Orders or Trade Wars are not a solution. Neither Trump nor Biden, with his 43 executive actions, are on the path of real problem-solving. One was a populist-nationalist, whereas Biden sounds to be fixing ut with cosmetic surgeries.

Let’s explore Cess with Creativity to Counter Chinese Cannibalism.

Shashank Heda
Dallas, Texas

Disclaimer: These are my original thoughts without affiliation or alignment to any ideology. Your comments are welcome. If you forward, kindly forward with my name as the author. Thanks!

Eclipsed by Chinese rivals, Panasonic quits solar cells and panels

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