A lot has been in news behind the issue of ‘CAPITAL DUMPING’ until now. Whether is Amazon-Flipkart, Ola-Uber, Airtel-Vodafone or Walmart-Big Bazaar. Capital dumping has been here for a while now. This is not because Indian government has been reluctant to take necessary actions them but due to their smart play. If investigated further many facts has been reported online to prove that Capital dumping has been a healthy business in India and has penetrated the market to exist forever. If not stopped now this would kill the liberty and choice of end customers one day. We all can hep stop it before it grows and all our local players are compelled to quit the market. Soon a day would come where discounts and comparisons across various websites would be a dream because no other player would prevail to challenge the foreign players. Even I urge our government to closely examine these entities business and impose a necessary penalty.
What is CAPITAL DUMPING ?
DUMPING can fall into any of these four categories:
Lets examine one by one:
SPORADIC DUMPING
This dumping is ideally done when a particular manufacturer produces excess material and most of those inventories are left unsold. The manufacturer then tries to figure out a market where this dump could be easily pushed to recover the production cost. These dumping happens occasionally.
Example: Sporadic Chinese dump items purchased on Sunday Market deals from website like Shopclues or Paytm on their Sunday market deal.
PREDATORY DUMPING
This dumping is permanent in nature until that specific objective is met. In this dumping the same service or product is sold at a very less price in the competitive market with compared to home market to capture the market. Once the Local competitors are out of the business, the Service provider becomes the only monopolist in the market.
Example: Amazon trying to PREDATORY dump its services to knock out Flipkart or Snapdeal or UBER trying hard to knock out OLA from the cab service business.
PERSISTENT DUMPING
This type of dumping is permanent in nature. Here manufacturers charge full cost at home markets and marginal cost pricing in the other markets in order to have a balance in their revenue growth.
Example: Clothing brands are often seen adapting this type of dumping like Jack & Jones, Celio, Lee Cooper to name a few.
REVERSE DUMPING
This dumping is very flexible. Here manufacturers sell locally with lower prices in their home markets only.
Example: Micromax and Lava has been consistently dominating the budget phone category in India by releasing 2-3 phones every month.
Five things as a consumer to deal with dumping
There are many ways to have these dumping going on but we certainly need to have a competition going on to get the maximum benefits out of it.
- Focus on Quality: Not every brand focuses on quality overtime. Take advantage of it. Seek for quality products in a particular price segment.
- Do not be a brand slave: Give equal opportunity to brands in order to compete amongst themselves to deliver you a better quality.
- Do not buy cheap products: Never go on purchasing unwanted things just because they are cheap. You would end up making yourself poor and help them in generating the projected revenue.
- Be a complainer: Give consistent feedback to the brand representatives. This would help them maintain a consistent quality for other customers.
- Look for discounts: This is your right as a consumer. Always prefer brands with discounts to have a healthy competition.
Above all these please support MAKE IN INDIA initiative by purchasing goods manufactured in home country.
Happy Reading!