Subject: Re: China Export EV Price Mark Up
The world is full of inequality of prices.

My talents in operating my businesses were a sense of imagination in creating new engineering designs as if they were an artistic expression, selecting employees based on my determination of their true talents (which may not have had anything to do with their prior experience) and recognizing when there was an opportunity to re-invent my business into a new specialty which, while appearing to a casual individual was revolutionary, but which was mostly a change of vocabulary (if it was two paper cups and a piece of string in concept, it didn't mater what material the string and cups were analogs for).

But my love was procurement. The craft of locating the lowest cost for an item and taking advantage of different prices for the same item game me joy.

This was arrived at in a number of ways:

The easy way:

Because the firm started as a mail order outfit, shipping was a big deal, so we opened accounts at dozens of distributors and manufacturers of all sorts throughout the US. This was managed by a custom piece of software I wrote which pulled their various price sheets into a common database which compared "landed" prices of hundreds of thousands of SKU's across those distributors - always looking for the lowest aggregate cost.

Channel conflict:
For example, a manufacturer of high quality connectors might retail them for $12 and by negotiation, you might get them at a 15%-20% discount. But they might sell them to an OEM - who generally buys in large quantities and is not bound to any particular manufacturer as the connector is buried in its overall design - for $4 each - if he could reach his contracted volume. While his contract would generally forbid sale of the connectors on their own, find the right OEM, who had a monthly purchase quota to meet and you could frequently pick them up from him for $4.25 "cash".

Electrical "safety switches" (which range from 30 amperes to hundreds of amperes) were available to electrical contractors (which we were considered) at around a 10% discount from electrical distributers. But since HVAC installers were considered OEM's, the same switches were available from HVAC distributors at a 40% discount. All it took was opening an account at an atypical source.

Professional A/V installers got much better pricing on projectors, large monitors, etc. than computer resellers. Since one of the divisions of my firm specialized in commercial installations - design/build of theatres, conference halls, auditoriums and such, I was constantly at war to get them to give me the beneficial pricing structure.

Geographic "grey market":
Frequently, multi-national companies sold products at different prices in different countries.

For some reason (I could speculate, but let's leave that for another time), Cisco during the 2000's sold their equipment in China at "dumping" prices. A Cisco switch could easily cost more than a high end Mercedes by the time you filled its slots with options - and when we did a design/build of a network, we could supply dozens of them. While the chassis were pretty expensive, the options could end up costing nearly as much. While Cisco tracked the chassis serial numbers and resellers would have their contracts torn up (or worse) by transshipping those from China, within reason (you had to show a reasonable level of option purchases to keep thing plausible), you could bring in a large number of the options from Chinese sources at well below US distributor cost. (These were not good quality Chinese knockoffs, but actual Cisco goods with valid serial numbers from their Singapore factory - which also supplied their US distribution. It could raise your margin on the sale from 10% to 25%.

Back during the mid-1980's we were resellers of the NEC PC product line. In fact, we were one of their largest US resellers. They seem to have taken advantage of their Australian dealers from a price standpoint to the extent that it paid for them to have us ship PC's from the US to them.

Similarly, we were one of only four sources in the US (and the only non-Japanese one) for NEC's Japanese language PC's (at that time they had a 92% market share of the Japanese PC market). The price differential was wide enough that Japanese companies would buy from us and have the PC's sent back to the country they were built in.

Company divisions frequently sold their sister companies at list price:

We had contracts with two different divisions of NEC, both of which sold PC's. One of them ran out and, rather than buy from their sister company, found it cost effective to buy them from us and we had them drop-shipped from one NEC to the other.

The same took place with Qume 8 inch floppy disk drives - where my biggest customer for them was Qume who bought hundreds at a time from us.

And lastly, looking for idiosyncrasies of an item being sold under different names (and prices) to different markets.

While I had a number of purchasing agents working for me, I always enjoyed creating the strategic environment which made their job of finding the best priced solution largely mechanical in nature.

Jeff