Tuesday, August 28, 2012

The dark side of import price rorts

Oh good: now price discrimination is getting drafted into the politics of how to squeeze low-paid workers.

It’s unfair to single out Lenovo simply for following the rest of the industry in gouging Australian customers. If its products are priced 60% higher here than in America, that’s simply normal vendor practice.

The usual reasons are trotted out in http://www.crn.com.au/News/313278,lenovo-defends-60-percent-aussie-tax.aspx this CRN piece – “warranty, margins, channel and support”.

Since the Productivity Commission isn't convinced by these arguments, I don't see any reason to be. Worse: those with a drive-down-wages agenda want to draft retail prices into their political agenda.
Peter Reith – former Howard government minister, defender of Work Choices, and uncured sufferer of Relevance Deprivation Syndrome – told the ABC this morning that it was necessary to cut retail wages so as to help local companies compete with international purchases over the Internet.

For some reason, he didn’t think that price discrimination – the simple “whatever a market will bear” approach to geographical price-setting – is significant, even though it’s been identified by the Productivity Commission as the most convincing reason for the way the Australian market is slugged.

Then there's the question of price discrimination for products that exist only in the digital world. If a product leaves a California data centre for an Australian customer, you can’t blame retail staff prices for markups that might land it here at ten times the US street price.

The IT industry isn’t the whole story – practically any industry plays the same game. But I wonder if, as the industry currently in the spotlight, the IT sector wants to find itself drawn into the “Reith strategy”?

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