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The dangers of a strong currency...

13

Comments

  • macaque_2
    macaque_2 Posts: 2,439 Forumite
    Mr_Mumble wrote: »
    A cherry picking exercise. The likes of Sony and Panasonic are being trounced by Samsung, LG and Apple but it has very little, if anything, to do with pricing.

    Japanese car companies are still doing well (the latest BBC news reports for the big three):
    Toyota profits jump amid recovery from disasters

    Nissan profits jump as global sales hit record high

    Honda profit recovers from floods

    No losses there. Now these car companies are still moving production abroad and part of the reason is the strong Yen but my response to that is, so what? The reason the Yen is strong is thanks to an uber-efficient, highly productive workforce. If it was unproductive and lazy the Yen would naturally fall in value from a lack of demand for the currency.

    Also, it's not a bad idea to offshore lower-skilled activites, such as assembly, and keep the higher-skilled, such as design, in Japan. The Japanese can focus on more valuable jobs to improve their well-being while providing employment for many in Asia whose economies are making a rapid shift from agricultural to industrial production.

    I agree with a lot of this but not all. Sending jobs offshore has its place but has become grossly overused by badly managed companies. In many cases it is a no more than a short term fix with damaging long term consequences.

    These policies have cost us our once great car industry. Some will argue that we make cars (which we do) but in reality we are now beholden on the whims of foreign owners to keep those operations here. Retention of these businesses is often only achieved at great expense to the tax payer.

    Many companies in India and China that UK chemical companies outsourced from 10 years ago are now competitors and in some cases buying out their former supply chain customers.

    By outsourcing, many UK companies are turning a blind eye to illegal practices, exploitation and abuse. For example
    • Dumping waste in rivers rather than treating it
    • Operating dangerous processes without adequate investment in plant safety (the frequency of accidents and industrial explosions in some of these industries is unbelievable).
    • Very poor quality control practices with scant regard to documentation
    • Slave wages and bad working conditions
    • Etc
  • HAMISH_MCTAVISH
    HAMISH_MCTAVISH Posts: 28,592 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Mr_Mumble wrote: »
    Japanese car companies are still doing well

    The Japanese car companies make most of their cars for overseas markets in overseas markets.

    In fact, Japanese car companies produce more cars overseas than they do in Japan by a significant margin, and it's still increasing.
    Now these car companies are still moving production abroad and part of the reason is the strong Yen .

    And the other main part of the reason is high costs of production in Japan.

    There is a real disconnect on this board from reality.

    People want a strong currency, but they also want to manufacture and export.

    People want decent wages, but they also want UK manufactured products to be competitive.

    People want to buy cheap stuff in the shops, but they moan about the lack of things made here.

    You can't have both...
    “The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.

    Belief in myths allows the comfort of opinion without the discomfort of thought.”

    -- President John F. Kennedy”
  • ILW
    ILW Posts: 18,333 Forumite
    macaque wrote: »
    By outsourcing, many UK companies are turning a blind eye to illegal practices, exploitation and abuse. For example
    • Dumping waste in rivers rather than treating it
    • Operating dangerous processes without adequate investment in plant safety (the frequency of accidents and industrial explosions in some of these industries is unbelievable).
    • Very poor quality control practices with scant regard to documentation
    • Slave wages and bad working conditions
    • Etc

    Problem is that most consumers (myself included) couldn't care less as long as the end product is of good quality and the price is right.

    Free market for you.
  • purch
    purch Posts: 9,865 Forumite

    Do you want Japan to carry out policies which reduce the value of the Yen? What about all the extra problems created in doing this?

    Japan has been trying to reduce the value of the Yen for about as long as I can remember.

    I can't remember the last time a Japanese official didn't say that they wanted to lower the value of the currency.

    If this is an example of the damage an overly strong currency can do to your economy........:eek:
    'In nature, there are neither rewards nor punishments - there are Consequences.'
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Mr_Mumble wrote: »
    No losses there. Now these car companies are still moving production abroad and part of the reason is the strong Yen but my response to that is, so what?

    Also power generation is an issue.

    In Japan, the lights are already starting to go out...


    http://www.independent.co.uk/environment/green-living/in-japan-the-lights-are-already-starting-to-go-out-7754469.html
  • sabretoothtigger
    sabretoothtigger Posts: 10,036 Forumite
    Part of the Furniture 10,000 Posts Photogenic Combo Breaker
    Currency is supposed to be a means to transfer or hold wealth stably. When it gets hijacked by politics it is destructive and communication breaks down, Japan is a victim of that.
    I think the main negatives for Japan are not that they have money but how they use it. If their government was not printing for 20 years trying to weaken it they might have come to a resolution quicker on any problems
  • movilogo
    movilogo Posts: 3,235 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    That a strong currency is bad if you want to make things and sell them overseas.

    Then it must be good for UK as we don't have any product to sell and but things to import :)

    We'll just print more money when necessary.
    Happiness is buying an item and then not checking its price after a month to discover it was reduced further.
  • Degenerate
    Degenerate Posts: 2,166 Forumite
    Currency is supposed to be a means to transfer or hold wealth stably.

    This is the German view that is responsible for the economic blunders of the Euro-zone.

    Currency exists as a means of exchange to facilitate trade. It has no real value by itself, and people should not be encouraged to hoard it, as this interferes with it's primary purpose by reducing the supply available to keep economies moving.

    If you want to preserve your wealth, put it into tangible assets.
  • pqrdef
    pqrdef Posts: 4,552 Forumite
    People want a strong currency, but they also want to manufacture and export.

    People want decent wages, but they also want UK manufactured products to be competitive.

    People want to buy cheap stuff in the shops, but they moan about the lack of things made here.
    But I've had British cars and British tellies, and my life improved when I didn't have them any longer.

    All the same, I gather that foreign firms can make things in Britain for sale around the world. It seems to be the management that makes the difference.
    "It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis
  • ruggedtoast
    ruggedtoast Posts: 9,819 Forumite
    Back when I lived in Japan, almost ten years ago now, one of my friends was doing consultancy for Sony and they were really struggling then. The management were fairly upfront that the only division that was keeping them viable was Playstation; actually more PS1 than PS2 even then.

    Sony's problem is all these divisions. Minidisc came out and would have been a roaring success; except Sony Entertainment had a fit in case people used it to copy music so the recording functionality was crippled and the format died.

    By the time they launched NetMD Apple had left them for dead and no one cared.

    PS3 came out and because Sony wanted to sell blurays, each unit had to have a blu ray player inside it; a player most gamers didn't want and couldn't afford; so the machine limps along until the industry moves to download and blu rays on a games machine are irrelevant anyway.

    I wonder whether Sony's White Elephant division will insist on shipping an actual albino pachyderm alongside each new PS4.
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