Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Import News: The Dumb Economy

The Dumb Economy

Import News from the Importers Institute

12 June 2001 - The Dumb Economy

Fisher & Paykel used to be held as an example of "the knowledge economy." Finding it hard to compete, it sought - and got - tariff subsidies from government. Welcome to the dumb economy.

Fisher & Paykel (F&P) was once seen as a paragon of kiwi innovation. It makes washing machines, dishwashers and refrigerators. The appliance business made a trading profit of NZ$44 million last year, an increase of 22% over the previous year.

The only problem is that most of that profit (and that from its even more profitable importing activities) was wiped by a non-cash provision for unrealised losses on foreign currency of $64.2 million.

F&P has a large share of the local market. This is, in part, due to a policy of only supplying those retailers that undertake not to sell goods from other companies. The Commerce Commission ruled that this is not anti-competitive.

Some competition remained, most of it from importers of Korean appliances and independent retailers. Competition meant that F&P could not simply increase prices to make up for the foreign exchange losses.

That problem has now been solved. Government agreed to impose very high tariffs under provisions for "anti-dumping."

The price that importers pay will no longer be that freely agreed between them and their suppliers. From now on, it will be a price established by officials in Jim Anderton's Ministry of Economic Development.

The new import prices are carefully calculated to be "non injurious" to F&P, i.e. they will enable the company to increase its own prices to consumers by hobbling the competition. Consumers, as usual, will pay. The importers in question may go out of business. Now, how dumb is that?

--

Previous Import News items are published on our Internet site http://www.importers.org.nz.

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Gordon Campbell: On The Tax Working Group’s Road Map

Trying to analyse the interim report on the Tax Working Group (TWG) is like trying to review an entire All Blacks game, but at the half- time mark… More>>

ALSO:

Cut Before Using: Australian Strawberries Withdrawn

Needles were found in a punnet of strawberries sourced from Western Australia, which was bought in a Countdown supermarket in Auckland. The Choice brand of strawberries was sold nationwide last week. More>>

ALSO:

"Broad-Based Growth": GDP Rises 1 Percent In June Quarter

Gross domestic product (GDP) rose 1.0 percent in the June 2018 quarter, up from 0.5 percent last quarter, Stats NZ said today. This is the largest quarterly rise in two years. More>>

ALSO:

Judicial Review: China Steel Tarrif Rethink Ordered

On 5 July 2017 the Minister determined not to impose duties on Chinese galvanised steel coil imports. NZ Steel applied for judicial review of the Minister’s decision. More>>