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Korean Job Discussion Forums
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Temporary
Joined: 13 Jan 2008
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 Posted: Sat Jan 26, 2008 7:29 am Post subject: |
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| Koreans should have to compete for everything I hope Canada doesn't get suckered into a crapy FTA. I hope Korean Auto manufacturers get slapped with the 40-75% tarrif just to be fair. |
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supernick
Joined: 24 Jan 2003
Location: Seoul
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| Posted: Sat Jan 26, 2008 2:50 pm Post subject: |
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| Quote: |
| Koreans should have to compete for everything I hope Canada doesn't get suckered into a crapy FTA. I hope Korean Auto manufacturers get slapped with the 40-75% tarrif just to be fair. |
If Korean made cars were taxed by the same amount (35%) in N.America and Europe, then there would be no Korean car industry
One question; Would anyone pay the same amount or more for a Sonota than for an Accord? If they faced higher duties, their industry would be gone. |
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mindmetoo
Joined: 02 Feb 2004
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| Posted: Sat Jan 26, 2008 3:45 pm Post subject: |
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| supernick wrote: |
But korean cars are not cheaper in reality. The retail cost in Canada might be lower and that is because they are only taxed by 5% on import duty. canadian made cars in Korea are taxed by 35%. This is unfair, and if Korea wants to sell their products in Canada duty free or with very little import tax, then Canadian products should enjoy the same benifits, but then we are talking about Korea here that somehow thinks it's a special case.
Korean cars can still compete well in the world because they are made with lower cost steel production which is really Korea's main advantage. |
First, it doesn't matter what advantage they have. We all grow wealthy when people exploit their advantages and we don't have laws that say we need to buy something from someone who doesn't have an advantage. The premier of Ontario would have to be more than drunk to argue Ontario car companies need to use $2,000 of extra Ontario nickel. Consumers wouldn't stand for it, even if the PM argued "well it will save x number of jobs in Sudbury."
So actually we should drop the whole import duty. And it doesn't matter what Korea does. What matters to a Canadian car consumer IS the retail price of cars. Period. Canadians are buying Korean cars. Lots of them. They offer lower prices, long warranties, good gas mileage. The consumer saves money. Sorry, sucks if you're GM but then it's great if you're a movie theater now that Canadian has $2000 extra dollars and is able to spend a portion of that on a movie or go to a restaurant or take a flight to Vancouver to holiday.
And what do you suppose Koreans do with the $16,000 they get from Canada? They trade it for won giving it to someone who wants to buy $16,000 worth of Canadian good, services, or assets. The money does very little good in Korea.
So not only does the money come back, but Canadians get something for less. Yes. sorry economics change. There are no buggy whip makers or milk maids today, either.
But let's say the Korean government really cranks up the import duties on Canadian products, making it nearly impossible for any Korean to recycle those Canadian dollars, by buying Canadian beef, luxury cars, airplanes, etc (we'll ignore for a moment the Korea still has the option to buy a condo tower) and selling it at a profit in Korea. Boy that Korean current account really looks good, huh? Korea takes in billions but doesn't get to spend those billions by bringing in foreign products. Who is going to be hurt by that? Guess what. Koreans. If Kia finds every time it sells a car in Canada, no Korean now wants to exchange Won for Canadian dollars, Kia isn't going to want to sell cars in Canada anymore. It's getting entirely useless slips of paper. There's your problem solved. Koreans won't sell cars to Canada anymore.
Societies grow rich via trade, regardless of borders. It's been known since Adam Smith. We grow rich at the cost of change. Consumer tastes change. Resources grow expensive and some other nations find ways to be more efficient. Autoworkers have their good jobs because of trade. The unspoken risk is trade will bite you on the ass. But you get nothing if you risk nothing. You're more than free to buy some land some place, farm it, produce your own food. You won't be subject to the vast changes brought about by trade but you'll not be subject to wealth either.
Here's a list of the 5 cheapest cars from 2005.
1. Kia Rio - $9,800
2. Chevrolet Aveo - $9,995
3. Hyundai Accent - $10,000
4. Toyota Echo - $10,355
5. Saturn ION $10,999
One should note the Aveo is made in Korea. GM daewoo. So the three cheapest cars (at least in 2005) are Korean. If you want to buy the cheapest made in NA car then you're looking at the ION and paying $1000 more.
Assuming Korea has no import duties on Canadian cars, are Koreans going to spend $1000 more on a Saturn than a Kia? Probably not. We know Koreans. They will spend, however, $20,000 more to buy a BMW or Lexus. If NA auto companies really want to sell in the Korean market, they need to figure out what luxury cars Koreans want to buy. You'll notice there are many European luxury cars on NA roads but very few European compacts. I don't see many Fiats or Renaults. The Europeans mostly figured out they can't compete with Asian and domestics in NA. But they can do well in the luxury market.
I dunno. I don't think we should force Canadians to pay more for basic transportation because GM can't hire marketing wizards who can figure out how to compete with Europeans luxury car makers in Asia.
I will bet you that Koreans are not paying $9800 for their Kias but 35% more. If the cheapest NA car cost 15,000 after duty in Korea, then Kia is going to sell its cheapest car at $14800 in Korea. Guess who gets hurt in this deal? You want to replicate that error in Canada. Sony faces a 35% duty in Korea. But you'll notice Samsung cameras are not 35% cheaper than Sony. Hrm.
America has had a trade deficit for the last 30 years. The American economy has grown tremendously in those 30 years. If a trade deficit was a bad thing for a nation, you might think after 30 years of such it would make itself known in GDP. The money that doesn't come back as purchases of American goods and services comes back as investments in shopping malls, office towers, factories, stocks, coal mines, etc. Sony bought a movie studio with its American dollars. The Americans who owned shares in WB (I forget which major studio it was now) and sold them for a profit weren't complaining, now. |
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