Kelvin Leung's Blog

The country’s fasting growing sector in retailing, the simple dollar stores, are forcing the mainstream competitors, including Wal-Mart Canada Corp. and Canadian Tire Corp., to increase their dollar promotions. Dollar stores have been an ongoing threat for the many years in the industry, but today, they are becoming a bigger force as Canadian market leader Dollarama Inc. is expanding aggressively and U.S. rival Dollar Tree Stores Inc. ramps up its operations here after having scooped up a domestic chain. The dollar stores have been attracting customers with its cheap prices, convenience, and the overall simple style. On the other hand, Canadian Tire and Wal-mart are trying to retaliate by introducing dollar programs, for example Canadian Tire’s “dollar deal”. The big players are hoping that the consumers will come in for a $1 item and at the same time purchasing other, more expensive, products.

The biggest attraction of the “dollar stores” is the low cost products, which on the other hand, the mainstream retailers sells high-quality goods. When Canadian Tire and Wal-Mart begin to match the low costs, they will need to reduce the product quality of the items. Instead of filling the aisles with merchandise with a dollar price tag, Canadian Tire should instead explain to the customers the differences, and let them make the decision of whether to choose quality or cost. For example, Canadian Tire should only provide high end and top notch automotive accessories, instead of providing low quality items. The migration towards the same dollar stores’ style has definitely lowered the product quality at the high-end department stores.

I think it is bad that every retailers are chasing the same consumer. In return, it would only create a boring and homogenous retailing experience for the customers.

http://www.theglobeandmail.com/globe-investor/how-canadas-retailers-discounted-the-rise-of-the-dollar-store/article4596897/

The report of a 3000 to 4000 workers’ strike at Foxconn’s Zhengzhou complex in central China came weeks after Apple’s release of its new iPhone 5 smartphones. Although the report was issued by the New York- based advocacy group China Labor Watch, Foxconn denied the claims and stated that the plant only “suffered two brief and small disputes several days earlier.” There have always been repeatedly tensions between Foxconn and its workers. This time, the workers were angered by over-exacting quality controls as well as demands they work through the week-long National Day holiday. According to China’s official XinHua News, a strike erupted after some 100 quality inspectors at Foxconn refused to work for an hour after workers irate allegedly beat one over the inspection demands. The instruction to strengthen quality inspections was given by Apple itself to reduce costumers’ complaints of flaws in the new phone.

The workers were upset because the quality-control inspectors were rejecting their works due to increasing customer complaints from the West. The stricter inspection policy eventually led to many rejections, and slowly over time, the workers would be getting a lower income because on their “poor” performances. As a result, they erupted beat the inspectors who were rejecting their work. In return, the inspectors went on strike hoping to get protections from the workers’ beatings. The problem with China and Foxconn is that they are keeping their wages and currency too low. China should first improve the standard of its people, giving them education and elevating their living. Controversially from China’s perspective, it needs foreign companies to assemble their products there in order to leverage on their market size to create jobs for its people. Keeping the costs low is the main factor that is attracting international companies to China. Is it possible to find a balance between the two? Should Apple bring these manufacturing jobs back to the US? Is it ethical for Foxconn to suppress and overwork their workers to meet the demand of the West?

The Foxconn’s strike has clearly illustrated that China is going through a transition. The workers are demanding a higher income and a better working condition. China is no longer a paradise of cheap labor and poor working conditions.

http://www.reuters.com/article/2012/10/06/us-apple-foxconn-idUSBRE8941JF20121006