Duh (I)

Made in China: Suspect Imports Raise Questions About the Real Value of Getting Lowest Price”—Headline, USA Today, 0703.07.

I’m delighted, at a personal level, to pay less rather than more than expected for an item—stiffed by lost baggage, I was greatly pleased with the $4 underwear I acquired at midnight in Eugene, OR, at Wal*Mart. But I’m also old enough to believe (hangs in there with the Golden Rule) that “Things that are too good to be true are too good to be true.”

I have long argued pigheadedly that low-cost producers will eventually get hammered. (It seems to be happening to Dell and Wal*Mart as we speak—or write.) I believe that business’s most likely winning hand, especially in the mid- to long-term, is to live near the top of the price-value heap. In short, as I see it, the low-cost producer has little to fall back on when competitors invariably catch up—that is, a shriveled Culture of Innovation; a high-value producer has only stayed there via constant innovation, big and small. Needless to say, I feel exactly the same way about vendors and every other member of the supply chain.

China will rally, I have no doubt of it. But when they do, they won’t offer the same “unbelievable” cost advantage. “If it’s unbelievable … “

(Corollary plea: Please, with a few exceptions related to health, let the market take care of this—not my dear fellow Vermonter, Senator Bernie Sanders, and his pals.)

Tom Peters posted this on July 6, 2007, in Strategies.
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