Imported Good Shops Practically Out of Business!!

[Philsword]

I think the key is make local products competitive in the world market. When you protect local industry usually all you get is crappy products and high prices. You can look at small countries that do quite well in some areas, like Nokia in Finland. They didn't build Nokia by banning the importation of cell phones into Finland. If Argentina wants to become a more industrial country then the products they produce must be equal to or better than competitive products from other countries around the world. Argentina has fairly low labor costs but this is offset by high taxes, inflexible labor laws, and political instability. I don't think Argentina with its overall political and economic environment will be successful in increasing the industrialization of its economy.

 

[sesamosinsal]

I think the key is make local products competitive in the world market. When you protect local industry usually all you get is crappy products and high prices. You can look at small countries that do quite well in some areas, like Nokia in Finland. They didn't build Nokia by banning the importation of cell phones into Finland. If Argentina wants to become a more industrial country then the products they produce must be equal to or better than competitive products from other countries around the world. Argentina has fairly low labor costs but this is offset by high taxes, inflexible labor laws, and political instability. I don't think Argentina with its overall political and economic environment will be successful in increasing the industrialization of its economy.

The labor laws come as a result of the unions. I'm a supporter of unions, but here they have entirely too much power.

Example: It is a possibility that in the coming weeks the Subte workers will go on strike because having to facilitate the topping up of the Monedero/SUBTE cards causes tendinitis -- I'm not joking. If their demands are not met (which I don't know what they are -- stop SUBE all together?), the unions that control the Subway system could go on strike and hold everyone hostage who lives and works in the capital.

As to why they'd be complaining about this (tendinitis? Come on.), no one really seems to make that clear. Argentine journalism is pretty bad. However, this article in Pagina12 seems to sum up why transitioning to SUBE/Monedero would be bad for the Subway system (as well as other government-subsidized transportation services):

En la actualidad los subsidios al transporte, que superan los 12 mil millones de pesos anuales, se orientan a las empresas. La liquidación se realiza por declaración jurada. Es decir que el Estado paga lo que la empresa reclama. Los colectivos reciben un subsidio que representa el 70 por ciento de sus ingresos; porcentaje igual recibe el subte. En el caso del ferrocarril el subsidio significa el 80 por ciento de sus ingresos. En diversos controles se han encontrado pedidos de subsidio por viajes no realizados o por más pasajeros de los que viajaron. El transporte más difícil de controlar es el de colectivos, que además es el que más fondos recibe por subsidios: 7500 millones de pesos al año. La Secretaría de Transporte ha detectado una cantidad importante de viajes de noche que no se realizan, pero las empresas igual reclaman el subsidio. La estimación oficial es que el nuevo sistema ahorrará aproximadamente 2000 millones de pesos anuales por mayor transparencia.

With 70 percent of the Subte's income coming from government subsidies and $2 billion ($476 million USD) ARS being stolen by the transport companies, why in the world would any of them want to make the whole deal more transparent? But no one is going to mention that... they're going to invent some ridiculous problem to stop SUBE all together. The beauty of unions in Argentina...

 

[PhilipDT]

I fully believe that protecting local businesses from cheap imports only helps Argentina and is a win win situation for job creation.

I completely agree if you are talking about companies selling imported products at a loss or a lower than normal margin, leveraging cash reserves to put competitors out of business. That is predatory behavior and should be regulated. If companies are selling imports for the same price they're sold for around the world, I wouldn't consider that selling CHEAP imports, I'd consider that selling NORMALLY priced imports.

If there is a competing product from Industria Argentina, it already would enjoy the benefit of reduced transportation costs and lower total taxes.

Look at the American auto industry, competition didn't kill it, it saved it. The big three were loosing all their sales to imports and look what happened. There has been a definite change up in the offerings from all three. There are hybrids from each one, non hybrids are beating imports on efficiency. Build quality is going up. If there never had been any competition, why would they have ever deviated from the status quo?

 

[TheBlackHand]

Ha, nokia is actually a pretty bad example. It's being kept afloat by Microsoft at the moment and will be bought out or dismembered within the next year or so. They are losing market share left and right.

They can't make a decent profit only operating in Finland, while Argentinian companies can make a decent profit only servicing Argentinian demand. And nokia SUCKS compared to the competition.

HTC, might have been a better example. But again you are talking about a different business model, different market shares. The OEM business doesn't really apply to this conversation. There are tons of Chinese OEM's that are making a killing only operating in China. The only reason they would consider expanding internationally would be because of popular demand, not because they need to.

I think the key is make local products competitive in the world market. When you protect local industry usually all you get is crappy products and high prices. You can look at small countries that do quite well in some areas, like Nokia in Finland. They didn't build Nokia by banning the importation of cell phones into Finland. If Argentina wants to become a more industrial country then the products they produce must be equal to or better than competitive products from other countries around the world. Argentina has fairly low labor costs but this is offset by high taxes, inflexible labor laws, and political instability. I don't think Argentina with its overall political and economic environment will be successful in increasing the industrialization of its economy.

 

[katti]

do you have a source for this?

the papers...

 

[katti]

That may be the aim, but the premise is far-fetched and most companies will just walk away....there's better business to be done elsewhere.

That's what i thought too, but I am surprised to see how many companies give in.

Even blackberry, Apple... start producing (assembling) in Patagonia and they will be back on the market. (Blackberry is already back).

Other products "missing" : electrodomesticos, European cooking wear,...

 

[Philsword]

Ha, nokia is actually a pretty bad example. It's being kept afloat by Microsoft at the moment and will be bought out or dismembered within the next year or so. They are losing market share left and right.

They can't make a decent profit only operating in Finland, while Argentinian companies can make a decent profit only servicing Argentinian demand. And nokia SUCKS compared to the competition.

HTC, might have been a better example. But again you are talking about a different business model, different market shares. The OEM business doesn't really apply to this conversation. There are tons of Chinese OEM's that are making a killing only operating in China. The only reason they would consider expanding internationally would be because of popular demand, not because they need to.

If you don't like the Nokia example there are plenty of others. To be really successful any industry in Argentina has to competitive in world markets. Setting up trade restrictions to keep competing products out you will end up with bloated industries making bad products at inflated prices.

 

[Ries]

The idea of protecting domestic producers is not, in and of itself, bad.
Plenty of countries do this.

What is silly, however, is expecting each individual importer to export an equivalent amount.

Usually countries are satisfied to use laws, tariffs, and regulations to get the TOTAL import/export ratio in balance.

To expect Honda to export soybeans, or Nike to export Malbec, is just dumb- its inefficient in the extreme to expect a company that is good at one thing- say, selling sneakers- to also be adept at sourcing, packing, shipping, and selling abroad some argentine product.

There are better ways to achieve this goal- its not rocket science, countries have been doing this trade balance thing for a century or more, and economics textbooks discuss it.

 

[CarverFan]

Katti, most of the foreign brands found here are of inferior quality. My Bosch fridge broke down after 2 years....even the Twinings tea bags split when you add hot water! The foreign merchandise available is specially designed for this market, poor quality at an inflated price.

 

[zingara]

CarverFan:
I don't get it. Really? Foreign merchandise designed for the market with poor quality?
Sounds like dumping. I thought there were international commerce laws against that.