I must be missing something

[Anthony5]

The guy has a very valid point, since western currencies lose their value, it should be cheaper to buy in thb.

Whats with people trying to make fun of him?

he is funny because he has failed to understand "supply & demand. maybe i can teach him quickly. ----if all 25 of da ho's in a bar charge 2500 bht for happy , then the police come and arrest 15 of them how much will the remaining ho's charge ? 4000 is the correct answer, they will increase the price due to the demand created by the coppers, no money will be lost due to the coppers action, this is s&d :-)

You're funny because you fail to understand that during the past 6 months at least, the demand for imported food products has declined because there are much less foreigners in Thailand, while the supply clearly has been steady which is obvious from the massive increase in near expiration goods.

Over to you again.

[skatewash]

The USD has stayed the same with the baht over the last 18 months. Also, Americans are quite wealthy now due to the US stock market run up in recent years as well as the strong dollar.

There are a lot of Americans in Thailand and they can afford to pay high prices. It's supply and demand.

There really aren't that many Americans in the stock market. Most don't have that kind of extra money. You must have wealthy friends.

Wrong. Most Americans have investments in the stock market.

Just over half of Americans, 52%, now say they personally, or jointly with a spouse, own stock outright or as part of a mutual fund or self-directed retirement account.

http://www.gallup.com/poll/162353/stock-ownership-stays-record-low.aspx

By the way, that 52% figure represents a record low.

[Berkshire]

This thread is about what is the logic behind the fact that prices of imported goods rise, while they actually should decline because the value of the currency in which they are purchased has declined.

OP, you're really confusing basic business decisions with international currency exchange fluctuations when one has nothing to do with the other. Do you think the retail management checks the currency exchange rates of each country where products are imported from on that particular day? If that's the case, American products should be priced differently than French products because the dollar has been strong, correct? How about Chinese products? Fact is--and has already been pointed out--it's simply a function of supply and demand of niche imported products. Retailers can and should charge whatever the market will allow. It seems a lot of foreigners are willing to pay outrageous prices for imported products. Retailers would be stupid to charge less. I shop at the Rim Ping and I'm constantly amazed by the prices of basic imported food stuffs, but clearly, some people are willing to pay. Your choice.

Do you think the retail management checks the currency exchange rates of each country where products are imported from on that particular day?

The Euro, from where Big C for example imports all it's homebrand products. didn't decrease 30% in value yesterday. It happened 6 months ago and has been like that since.

What I'm saying is that it doesn't exactly work that way. Look at the price of oil. It's gone down like 50% in the last year, yet, up and down the supply chain, there hasn't been a noticeable decrease in the price of manufactured products. Or airfare. Or electricity. Or a taxi ride. Etc, etc. I have noticed a significant drop in the price of petrol (for private auto), but the savings really hasn't been passed down on other products.

[Ghostnigel]

Many American retirees live in Thailand. They are paid in USD, the world's reserve currency, very strong right now. In addition, as I said, they are wealthy due to the stock market run up. They have no problem with the prices at Big C and elsewhere.

The OP didn't say he had a problem, he wants to know WHY prices are going up and not down. Nothing to do with being American, in fact he's talking about European companies... So back off.

I have no problem with the prices either, and i'm not American, but thats not what this thread is about.

I don't think its supply and demand, more like the opposite, thai way is if business is slow, put the price up!

That's what i think anyway.

[Anthony5]

This thread is about what is the logic behind the fact that prices of imported goods rise, while they actually should decline because the value of the currency in which they are purchased has declined.

OP, you're really confusing basic business decisions with international currency exchange fluctuations when one has nothing to do with the other. Do you think the retail management checks the currency exchange rates of each country where products are imported from on that particular day? If that's the case, American products should be priced differently than French products because the dollar has been strong, correct? How about Chinese products? Fact is--and has already been pointed out--it's simply a function of supply and demand of niche imported products. Retailers can and should charge whatever the market will allow. It seems a lot of foreigners are willing to pay outrageous prices for imported products. Retailers would be stupid to charge less. I shop at the Rim Ping and I'm constantly amazed by the prices of basic imported food stuffs, but clearly, some people are willing to pay. Your choice.

Do you think the retail management checks the currency exchange rates of each country where products are imported from on that particular day?

The Euro, from where Big C for example imports all it's homebrand products. didn't decrease 30% in value yesterday. It happened 6 months ago and has been like that since.

What I'm saying is that it doesn't exactly work that way. Look at the price of oil. It's gone down like 50% in the last year, yet, up and down the supply chain, there hasn't been a noticeable decrease in the price of manufactured products. Or airfare. Or electricity. Or a taxi ride. Etc, etc. I have noticed a significant drop in the price of petrol (for private auto), but the savings really hasn't been passed down on other products.

Has nothing to do with the OP. The imported goods should have decreased in price because the purchase price has decreased, not because of other indirect factors.

Furthermore instead of having decreased in price because the purchase price dcreased, they have in fact increased the prices during the same period.

[Robert24]

I don't know if your observation is correct, I hardly ever go shopping in BigC etc. All I know is that if what you say is correct, you can make a killing by important goods and selling them cheaper than competition. Make sense?

Even if this was the case, for the average Joe it would not be so easy. Cost, red tape, etc etc, would just not be worth it.

If the likes of Giants like Tesco struggle in Thailand, as if any of us individuals can break into that side of the business.

It's actually not difficult to import products in Thailand. I've imported various things from China and Taiwan before and sold it again. Just start doing it, it's far easier than you think. And if this product is in demand and you can sell it say for 20% below the price of retailers like Makro, BiGC etc, then for sure you can make a killing from it.

However I suspect that the products referred to are probably low volume, low demand products. Or am I wrong? What groceries are imported and in high demand?

You imported food items for resale in Thailand?

Why I don't believe you.

For importing food items in Thailand you need a FDA approval which can take up to a year and loads and loads of paperwork.

NEXT.

I imported electronic items from Taiwan and Sports clothing from China, not food items. Never claimed that. You seem to be quite aggressive or grumpy... Just trying to explain you that rather complain about a situation you cannot change, why not see the business opportunity? Would help you look at the world in a different way.

[Robert24]

@Anthony5:

I think I mentioned it before. Prices of imported products would only decline if there is competition for the same product and sales volumes are high. In such a case, competitors would lower the price and increase their sales overall because customers would buy from them. However if there is little demand for the specific product and only very few players in the market selling this product, prices won't go. Why would a company lower prices in such a case? It doesn't make sense because you would only lower revenues.

[Anthony5]

Even if this was the case, for the average Joe it would not be so easy. Cost, red tape, etc etc, would just not be worth it.

If the likes of Giants like Tesco struggle in Thailand, as if any of us individuals can break into that side of the business.

It's actually not difficult to import products in Thailand. I've imported various things from China and Taiwan before and sold it again. Just start doing it, it's far easier than you think. And if this product is in demand and you can sell it say for 20% below the price of retailers like Makro, BiGC etc, then for sure you can make a killing from it.

However I suspect that the products referred to are probably low volume, low demand products. Or am I wrong? What groceries are imported and in high demand?

You imported food items for resale in Thailand?

Why I don't believe you.

For importing food items in Thailand you need a FDA approval which can take up to a year and loads and loads of paperwork.

NEXT.

I imported electronic items from Taiwan and Sports clothing from China, not food items. Never claimed that. You seem to be quite aggressive or grumpy... Just trying to explain you that rather complain about a situation you cannot change, why not see the business opportunity? Would help you look at the world in a different way.

This thread is clearly about imported FOOD items, and this is the 5th time you start to derail the thread with trying to change the subject, so I think my remarks are justified.

And no I'm not interested to order something from Aliexpress, so not helpful at all.

[TheAppletons]

Has nothing to do with the OP. The imported goods should have decreased in price because the purchase price has decreased, not because of other indirect factors.

Furthermore instead of having decreased in price because the purchase price dcreased, they have in fact increased the prices during the same period.

Says only you.

As others have mentioned, there is nothing written in stone that says when a company's costs decrease it will automatically reduce the price of something, particularly in a market that either lacks competition or where the price elasticity of demand is relatively inelastic (which is really what we're talking about here.) Instead the company will reap excess profit due to the reduction in costs.

Obviously, that's not what you want to hear so you continue to argue with just about everyone on the thread.

[Robert24]

I think you're mistaking BMW,MERCEDES with the likes of Ferrari, Lamborghini.

BMW might be high end, but by no means can a 3 series be regarded as a luxury product. This isn't a ferrari california for gods sake.

People are still price sensitive when it comes to buying BMW,Mercedes, make it couple of 100 thousand baht more expensive, they'll have to settle for another brand.

BMW is a luxury brand....and in a country where many people cannot afford any vehicle whatsoever, a 3 series is most definitely considered a luxury product.

There are more cars in Thailand than there are in my home country.

Mercedes declared many years ago Thailand as their second best market after Germany.

that's just wrong. Mercedes-Benz sell about 15,000 cars p.a. in Thailand. In China alone last year, they sold rougly 1.3 million vehicles, nearly 100 times more than Thailand. By the way Benz sells about 330,000 vehicles per year in the US. So Thailand is way at the back on their Global list of Sales.

[Anthony5]

Has nothing to do with the OP. The imported goods should have decreased in price because the purchase price has decreased, not because of other indirect factors.

Furthermore instead of having decreased in price because the purchase price dcreased, they have in fact increased the prices during the same period.

Says only you.

As others have mentioned, there is nothing written in stone that says when a company's costs decrease it will automatically reduce the price of something, particularly in a market that either lacks competition or where the price elasticity of demand is relatively inelastic (which is really what we're talking about here.) Instead the company will reap excess profit due to the reduction in costs.

Obviously, that's not what you want to hear so you continue to argue with just about everyone on the thread.

Did you notice that I said that the price not decreased, but instead they even increased the price while they already had an extra profit because of the lower exchange rate.

Nothing to do with economics, it's called pure greed.

[meltingpot2015]

The OP wrote, "we all know that the cost of living in Thailand has gone up a lot." Nonsense. Rate of inflation is 2%.

I moved all my cash to Thailand when the dollar peaked. I know a lot of Americans who did the same thing. A lot of retired Americans here because they lived here in the 1960's as young men and have now retired.

The important budget items are lodging, utilities and transportation. For me those things have stayed the same for the past 5 years.

I buy at Lotus Diet Pepsi and it's been 25 baht big bottle for as long as I can remember. I also buy Gillette razor and blade 22 baht for as long as I can remember. My medication has gone down in price (patents expired). I would dispute the OP contention about 30% increase in food prices for Western items.

My Honda Click uses so little petrol that it might as well be electric, the amount is so small per month I can't even tell you what it is. My doctor told me not to eat cheese so I don't know how much that costs same with beer and whiskey.

I locked in lodging prices years ago by purchasing. Cooking gas is one bottle of gas every 6 months or so. My whole house AC costs around 1200 baht per month. Vegetables free and rice free from the family garden and family rice fields. I'm drying herbs right now as I type. I buy olive oil and coconut oil but not too much. I bake my own bread and make my own sausage. It does not take much thought or skill to live really cheap in Thailand.

I guess I could buy expensive canned tomato sauce from Italy but last week I paid 12 baht for a big bag of fresh plum tomatoes and boiled them down with my three different kinds of dried basil fresh onions and garlic and made my own sauce.

I'm retired and have the time to make tomato sauce and sausage; maybe that's the difference.

Below is the stock exchange from Thailand

My whole house AC costs around 1200 baht per month.

Please tell us how you manage to do this. Solor Power panels on your roof?....Wind Turbines?. Have you fitted new A/C units (maybe more economical in the long-run???)

I paid 3227 Bhat for Electricity in a studio apartment last month. The owners charged 7 bhat per unit of electricity.

The A/C for your whole house cost 1200 Bhat per month.

[lostoday]

The OP wrote, "we all know that the cost of living in Thailand has gone up a lot." Nonsense. Rate of inflation is 2%.

I moved all my cash to Thailand when the dollar peaked. I know a lot of Americans who did the same thing. A lot of retired Americans here because they lived here in the 1960's as young men and have now retired.

The important budget items are lodging, utilities and transportation. For me those things have stayed the same for the past 5 years.

I buy at Lotus Diet Pepsi and it's been 25 baht big bottle for as long as I can remember. I also buy Gillette razor and blade 22 baht for as long as I can remember. My medication has gone down in price (patents expired). I would dispute the OP contention about 30% increase in food prices for Western items.

My Honda Click uses so little petrol that it might as well be electric, the amount is so small per month I can't even tell you what it is. My doctor told me not to eat cheese so I don't know how much that costs same with beer and whiskey.

I locked in lodging prices years ago by purchasing. Cooking gas is one bottle of gas every 6 months or so. My whole house AC costs around 1200 baht per month. Vegetables free and rice free from the family garden and family rice fields. I'm drying herbs right now as I type. I buy olive oil and coconut oil but not too much. I bake my own bread and make my own sausage. It does not take much thought or skill to live really cheap in Thailand.

I guess I could buy expensive canned tomato sauce from Italy but last week I paid 12 baht for a big bag of fresh plum tomatoes and boiled them down with my three different kinds of dried basil fresh onions and garlic and made my own sauce.

I'm retired and have the time to make tomato sauce and sausage; maybe that's the difference.

Below is the stock exchange from Thailand

My whole house AC costs around 1200 baht per month.

Please tell us how you manage to do this. Solor Power panels on your roof?....Wind Turbines?. Have you fitted new A/C units (maybe more economical in the long-run???)

I paid 3227 Bhat for Electricity in a studio apartment last month. The owners charged 7 bhat per unit of electricity.

The A/C for your whole house cost 1200 Bhat per month.

New Daikin inverter units 27 to 33,000 BTU's. Nice and quiet too. I have a guy who cleans them every 6 months.

When I lived in an apartment my landlord was charging me 4000 a month for a smaller place for electricity. There are a number of reasons that electricity is cheaper in a home in Thailand. I'm sure there is info on line about it.

[Anthony5]

The OP wrote, "we all know that the cost of living in Thailand has gone up a lot." Nonsense. Rate of inflation is 2%.

I moved all my cash to Thailand when the dollar peaked. I know a lot of Americans who did the same thing. A lot of retired Americans here because they lived here in the 1960's as young men and have now retired.

The important budget items are lodging, utilities and transportation. For me those things have stayed the same for the past 5 years.

I buy at Lotus Diet Pepsi and it's been 25 baht big bottle for as long as I can remember. I also buy Gillette razor and blade 22 baht for as long as I can remember. My medication has gone down in price (patents expired). I would dispute the OP contention about 30% increase in food prices for Western items.

My Honda Click uses so little petrol that it might as well be electric, the amount is so small per month I can't even tell you what it is. My doctor told me not to eat cheese so I don't know how much that costs same with beer and whiskey.

I locked in lodging prices years ago by purchasing. Cooking gas is one bottle of gas every 6 months or so. My whole house AC costs around 1200 baht per month. Vegetables free and rice free from the family garden and family rice fields. I'm drying herbs right now as I type. I buy olive oil and coconut oil but not too much. I bake my own bread and make my own sausage. It does not take much thought or skill to live really cheap in Thailand.

I guess I could buy expensive canned tomato sauce from Italy but last week I paid 12 baht for a big bag of fresh plum tomatoes and boiled them down with my three different kinds of dried basil fresh onions and garlic and made my own sauce.

I'm retired and have the time to make tomato sauce and sausage; maybe that's the difference.

Below is the stock exchange from Thailand

My whole house AC costs around 1200 baht per month.

Please tell us how you manage to do this. Solor Power panels on your roof?....Wind Turbines?. Have you fitted new A/C units (maybe more economical in the long-run???)

I paid 3227 Bhat for Electricity in a studio apartment last month. The owners charged 7 bhat per unit of electricity.

The A/C for your whole house cost 1200 Bhat per month.

New Daikin inverter units 27 to 33,000 BTU's. Nice and quiet too. I have a guy who cleans them every 6 months.

So you have more than 1 unit with the smallest 27000 BTU, and you claim that they all together use only 1200 Baht in electricity a month?

Have you ever switched them on?

[lostoday]

New Daikin inverter units 27 to 33,000 BTU's. Nice and quiet too. I have a guy who cleans them every 6 months.

So you have more than 1 unit with the smallest 27000 BTU, and you claim that they all together use only 1200 Baht in electricity a month?

Have you ever switched them on?

I just added a new one so it was easy to tell how much it cost to run. I've got a digital meter which also helps.

I run the living room and dining room and office all day long and the bedroom one only at night. Temp is set during the day at 30 and at night 25.

[Anthony5]

New Daikin inverter units 27 to 33,000 BTU's. Nice and quiet too. I have a guy who cleans them every 6 months.

So you have more than 1 unit with the smallest 27000 BTU, and you claim that they all together use only 1200 Baht in electricity a month?

Have you ever switched them on?

I just added a new one so it was easy to tell how much it cost to run. I've got a digital meter which also helps.

I run the living room and dining room and office all day long and the bedroom one only at night. Temp is set during the day at 30 and at night 25.

So you have 3 aircons, from which the smallest is 27.000 BTU, running all day every day, and a 4th one running at night and you use a total of 1200 Baht of electric a month.

Do you mind when I say you are making up things?

[lostoday]

New Daikin inverter units 27 to 33,000 BTU's. Nice and quiet too. I have a guy who cleans them every 6 months.

So you have more than 1 unit with the smallest 27000 BTU, and you claim that they all together use only 1200 Baht in electricity a month?

Have you ever switched them on?

I just added a new one so it was easy to tell how much it cost to run. I've got a digital meter which also helps.

I run the living room and dining room and office all day long and the bedroom one only at night. Temp is set during the day at 30 and at night 25.

So you have 3 aircons, from which the smallest is 27.000 BTU, running all day every day, and a 4th one running at night and you use a total of 1200 Baht of electric a month.

Do you mind when I say you are making up things?

I added one large unit last month (first day of billing period). The unit ran 12 hours a day. All other factors were constant. My bill went up 276 baht. I'll let you know what happens next month.

[meltingpot2015]

There are a number of reasons that electricity is cheaper in a home in Thailand.

Sure. You probably don't have a lift (elevator) in your home or communal lighting. I had both where I lived. Didn't use the lift and switched off hallway lights when not in use. Didn't stop me being stung for 7 bhat a unit.

Temp is set during the day at 30 and at night 25.

Isn't that just below outside temperature.

[lostoday]

There are a number of reasons that electricity is cheaper in a home in Thailand.

Sure. You probably don't have a lift (elevator) in your home or communal lighting. I had both where I lived. Didn't use the lift and switched off hallway lights when not in use. Didn't stop me being stung for 7 bhat a unit.

Temp is set during the day at 30 and at night 25.

Isn't that just below outside temperature.

Outside now is 36 most days it feels like 34. The AC dries out the air and makes it feel cooler and keeps mold away. You might want to look at government electrical subsidies in Thailand. I don't know that much about it. On demand water heaters instead of tanks and gas cooking I'm sure also helps to lower the total bill.

[Robert24]

Has nothing to do with the OP. The imported goods should have decreased in price because the purchase price has decreased, not because of other indirect factors.

Furthermore instead of having decreased in price because the purchase price dcreased, they have in fact increased the prices during the same period.

Says only you.

As others have mentioned, there is nothing written in stone that says when a company's costs decrease it will automatically reduce the price of something, particularly in a market that either lacks competition or where the price elasticity of demand is relatively inelastic (which is really what we're talking about here.) Instead the company will reap excess profit due to the reduction in costs.

Obviously, that's not what you want to hear so you continue to argue with just about everyone on the thread.

Did you notice that I said that the price not decreased, but instead they even increased the price while they already had an extra profit because of the lower exchange rate.

Nothing to do with economics, it's called pure greed.

it's not greed. It's commercial acumen. As a company you increase the price to maximise revenues. When revenues starts falling because people not buy anymore or buy with your competitor you stop increasing the price or lower it. It's basic economic behaviour. Nothing to do with moral or ethical values.

[meltingpot2015]

I think it's rather straight forward. Somone mentioned greed. That is an emotional reaction on the part of a buyer. The fundamental purpose of a business is to maximize profit and pricing is one of the major mechanisms to achieve this goal. Be honest with yourself, you woukd do the same if it were your business. In a market economy, prices are set based on demand. It's got nothing to do with cost. It certainly has nothing to do with what the price and demand situation is in a market thousands of kilometers away. Prices keep going up because the demand continues to support it ... period. So unless you are advocating Thailand move to a planned/controlled economy there is only one thing you can do and that is to vote with your Bhat (stop buying and substitute) ... and console yourself that being an economic refugee in Thailand means your purchasing power is considerably higher than were you living in your home country.

1) If greed is an emotional response, is it the same as crying?, tears of joy perhaps??..Greed itself is related to emotion. This is not the emotion of the buyer. It's the emotion of the SELLER. You've got these two mixed-up. Some form of greed is necessary by the seller, its the extent...e.g. should there be some limits.

2) A planned/controlled economy is bad. A market economy where prices are fixed (without competition) is worse.

3) Stop buying and substitute - Anyone offering this solution should offer/recommend suitable substitute products available in the market for the products the OP has mentioned. Otherwise its just like asking someone used to Champagne to buy Sparkling wine.

[Crossy]

I added one large unit last month (first day of billing period). The unit ran 12 hours a day. All other factors were constant. My bill went up 276 baht. I'll let you know what happens next month.

A reasonably modern 27,000 BTU A/C will use about 2kW from the electricity supply.

For 276 Baht you will get 67 units of electricity = 33.5 hours of compressor run.

30 days @ 12 hours a day = 360 hours

So your compressor duty cycle is about 10:1, our bedroom A/C manages about 6:1 with the thermostat set to 29C.

In a well insulated and shaded room with minimal delta-T I suppose it's do-able, but certainly not at the usual farang temperatures.

[SunLover2]

Actually, in your example, the police arresting 60% of the prostitutes would have reduced the supply of prostitutes in the bar not created demand for prostitution.

Reduced supply can also lead to reduced demand due to a lack of acceptable selections.

SL

[meltingpot2015]

Put it this way..Some cars can reach 160/180 Mph with a click of the fingers..but that's not justification (an argument) for increasing the speed limits. There are a whole host of factors to be taken in to account. Conditions of the road, skill level of the drivers etc.

I know some roads in Germany used to have unlimited speed limits. Don't know if this still the same. (NO Metaphor intended) But..I imagine this is (was) on fantastic highways which were well maintained.

If you take condoms for example..you wouldnt (couldn't) just put them on the market without instructions on how to use them (the producer will no doubt save some money from not printing instructions), because you don't (shouldn't) assume that everyone knows how to use a condom.

You could do away with printing the instructions IF everyone was aware how to use a condom.

[xen]

I have not read every post so perhaps somebody has mentioned that many multinationals buy and pay for their stock often a few years beforehand . The contract is signed and payment is placed in a suspended account until a delivery date , perhaps two or three years in the future. For example if the parent company of Big C has purchased 500 tons of frozen peas at x amount in 2012 and the market for frozen peas was high then then the company still has to base it selling price on the 2012 price to make back the loss when they are delivered and sold in 2015 . It works both ways of course - it is the basis of the futures markets and most multi - national companies play this game as a hedge against inflation..

[Anthony5]

I have not read every post so perhaps somebody has mentioned that many multinationals buy and pay for their stock often a few years beforehand . The contract is signed and payment is placed in a suspended account until a delivery date , perhaps two or three years in the future. For example if the parent company of Big C has purchased 500 tons of frozen peas at x amount in 2012 and the market for frozen peas was high then then the company still has to base it selling price on the 2012 price to make back the loss when they are delivered and sold in 2015 . It works both ways of course - it is the basis of the futures markets and most multi - national companies play this game as a hedge against inflation..

You must have a different experience as me. I have a friend who is general manager of a Carrefour hyper market in my home country.

In the past when I was still in business I also sold sometimes to supermarkets.

The multinationals pay 90 days AFTER delivery, not up front, and with many items specifically new in assortment they pay only what is sold.

[Berkshire]

Has nothing to do with the OP. The imported goods should have decreased in price because the purchase price has decreased, not because of other indirect factors.

Furthermore instead of having decreased in price because the purchase price dcreased, they have in fact increased the prices during the same period.

Says only you.

As others have mentioned, there is nothing written in stone that says when a company's costs decrease it will automatically reduce the price of something, particularly in a market that either lacks competition or where the price elasticity of demand is relatively inelastic (which is really what we're talking about here.) Instead the company will reap excess profit due to the reduction in costs.

Obviously, that's not what you want to hear so you continue to argue with just about everyone on the thread.

Well explained. The OP seems to be suggesting that if the cost side is reduced, companies are "required" to reduce the price. That doesn't give private industry an incentive to be operationally efficient, does it? I mean, if you reduce your cost, you'd want to see increased profits. I think this is another case where expats are losing purchasing power in Thailand and feel a need to blame somebody. And as usual, they're barking up the wrong tree.

[xen]

I have not read every post so perhaps somebody has mentioned that many multinationals buy and pay for their stock often a few years beforehand . The contract is signed and payment is placed in a suspended account until a delivery date , perhaps two or three years in the future. For example if the parent company of Big C has purchased 500 tons of frozen peas at x amount in 2012 and the market for frozen peas was high then then the company still has to base it selling price on the 2012 price to make back the loss when they are delivered and sold in 2015 . It works both ways of course - it is the basis of the futures markets and most multi - national companies play this game as a hedge against inflation..

You must have a different experience as me. I have a friend who is general manager of a Carrefour hyper market in my home country.

In the past when I was still in business I also sold sometimes to supermarkets.

The multinationals pay 90 days AFTER delivery, not up front, and with many items specifically new in assortment they pay only what is sold.

They will pay some on 90 day no doubt , usually the smaller or local suppliers who do not have the clout to negotiate like the bigger suppliers, but for the big players, the big multi-nationals it will be on the signing the contract, the money will go to a third party , usually a bank , who will hold the funds until and it will not be released until an agreed date , usually the delivery date , or certain conditions are met. . Interest etc will be negotiated in the contract of course. Therefore most of the prices are based on what was agreed to by the supermarket, or whoever is the purchaser, on prices agreed to ,perhaps a few years previously and the costs such as shipping has been factored in based on the costs agreed to in the contract . This will explain why with lower oil prices the shipping costs have not fallen..

[Anthony5]

I have not read every post so perhaps somebody has mentioned that many multinationals buy and pay for their stock often a few years beforehand . The contract is signed and payment is placed in a suspended account until a delivery date , perhaps two or three years in the future. For example if the parent company of Big C has purchased 500 tons of frozen peas at x amount in 2012 and the market for frozen peas was high then then the company still has to base it selling price on the 2012 price to make back the loss when they are delivered and sold in 2015 . It works both ways of course - it is the basis of the futures markets and most multi - national companies play this game as a hedge against inflation..

You must have a different experience as me. I have a friend who is general manager of a Carrefour hyper market in my home country.

In the past when I was still in business I also sold sometimes to supermarkets.

The multinationals pay 90 days AFTER delivery, not up front, and with many items specifically new in assortment they pay only what is sold.

They will pay some on 90 day no doubt , usually the smaller or local suppliers who do not have the clout to negotiate like the bigger suppliers, but for the big players, the big multi-nationals it will be on the signing the contract, the money will go to a third party , usually a bank , who will hold the funds until and it will not be released until an agreed date , usually the delivery date , or certain conditions are met. . Interest etc will be negotiated in the contract of course. Therefore most of the prices are based on what was agreed to by the supermarket, or whoever is the purchaser, on prices agreed to ,perhaps a few years previously and the costs such as shipping has been factored in based on the costs agreed to in the contract . This will explain why with lower oil prices the shipping costs have not fallen..

So to get to the point now. Big C is owned by Geant-Casino in France, while tesco lotus is owned by Tesco in the UK.

Their homebrand products, which in case of Big C is Casino, are shipped over from the head office in France who pays their stock in Euro's to their suppliers. So for the head office the cost stays the same.

The office in Thailand needs to pay the French office in Euro's, because the origin of goods is Euroland. So even with your scenario it still means that the Thai branch get their goods cheaper than 6 months ago, due to the devaluation of the Euro.

Now even if the shipping costs have stayed the same, they make up for only a fraction of the price per item.

Same will happen with the goods Tesco-Lotus gets from Tesco in the UK.

[xen]

I have not read every post so perhaps somebody has mentioned that many multinationals buy and pay for their stock often a few years beforehand . The contract is signed and payment is placed in a suspended account until a delivery date , perhaps two or three years in the future. For example if the parent company of Big C has purchased 500 tons of frozen peas at x amount in 2012 and the market for frozen peas was high then then the company still has to base it selling price on the 2012 price to make back the loss when they are delivered and sold in 2015 . It works both ways of course - it is the basis of the futures markets and most multi - national companies play this game as a hedge against inflation..

You must have a different experience as me. I have a friend who is general manager of a Carrefour hyper market in my home country.

In the past when I was still in business I also sold sometimes to supermarkets.

The multinationals pay 90 days AFTER delivery, not up front, and with many items specifically new in assortment they pay only what is sold.

They will pay some on 90 day no doubt , usually the smaller or local suppliers who do not have the clout to negotiate like the bigger suppliers, but for the big players, the big multi-nationals it will be on the signing the contract, the money will go to a third party , usually a bank , who will hold the funds until and it will not be released until an agreed date , usually the delivery date , or certain conditions are met. . Interest etc will be negotiated in the contract of course. Therefore most of the prices are based on what was agreed to by the supermarket, or whoever is the purchaser, on prices agreed to ,perhaps a few years previously and the costs such as shipping has been factored in based on the costs agreed to in the contract . This will explain why with lower oil prices the shipping costs have not fallen..

So to get to the point now. Big C is owned by Geant-Casino in France, while tesco lotus is owned by Tesco in the UK.

Their homebrand products, which in case of Big C is Casino, are shipped over from the head office in France who pays their stock in Euro's to their suppliers. So for the head office the cost stays the same.

The office in Thailand needs to pay the French office in Euro's, because the origin of goods is Euroland. So even with your scenario it still means that the Thai branch get their goods cheaper than 6 months ago, due to the devaluation of the Euro.

Now even if the shipping costs have stayed the same, they make up for only a fraction of the price per item.

Same will happen with the goods Tesco-Lotus gets from Tesco in the UK.

No Anthony, the price paid is what has been negotiated and agreed to at the time of the signing of the contract and the contract will specify what currency it will be in . That is unless they renege on the contract . Again it is speculation that the right currency has been chosen for either party.. It is the same as plying the futures market. The company takes a punt on the price they agree to today will return them sufficient profit when the goods are delivered in whatever specified time frame..The goods are probably not even grown or manufactured . Many farmers will grow crops on consignment to a supermarket chain or a food processing chain on a the basis of a future agreed delivery date for an agreed amount . If a storm wipes out the crop then the farmer is in deep shit but if the crop comes in then all parties should be satisfied and the farmer gets his money.