New Retail Model Links American Consumers Directly With Chinese Manufacturers

Who needs an American to make a gas (or charcoal) grill when I got a few thousand people in Asia who can do it for less?

Is the American quality better? Perhaps. But if the argument is on price, Americans lose. And now, American manufacturers have a whole new model of retail to deal with. Who needs Lowes to even sell grills for that matter when you have more choice on Amazon
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and get subsidized direct shipment from China. (Yes, China often subsidizes international postage.)

This is where online retail is going. And if you’re in the Senate, like Wisconsin Democrat Tammy Baldwin, and you simply want people to know where the stuff they are buying is made, you will be greeted by the awesome K Street might of National Retail Federation and Amazon lobbyists who will fight back.

Baldwin recently introduced the COOL Online Act. It would require the likes of Amazon to list where their products are made. Jeff Bezos’ Washington Post reported on May 27 that both Amazon and Walmart
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oppose such labeling.

The Online Advantage

Goods sold in person are required by law to display their country of origin, but current laws don’t force online retailers to include this information about their products, the Post reported.

The same holds for catalogs.

Go ahead. Check out that Sharper Image catalog you got in the mail this week. Imports? You don’t know. It doesn’t say.

“The provision will create a new liability for retailers and sellers to not only post the information but certify the accuracy of the information provided by product vendors,” more than two dozen industry associations, including the National Retail Federation and the Consumer Technology Association, wrote in a May 21 letter to the Senate Commerce Committee, the Post reported.

Weak. Very weak.

At the very least, they can say it is “imported”.

This is Amazon.com’s recommendation for a charcoal grill.

One would imagine that if Amazon is recommending an item, they should know from where they are importing the item into their warehouses. But you will not even notice that this is an import. Maybe the wheels are made in China. Or the thermostat. But if the bulk of the item is made in the U.S. from U.S. metals, then why not label it a Made in the U.S.A. product?

Other things on their website, like clothing, will often simply say “import”, just as it would on Macy’s.com. Online retailers might not know exactly where that particular shirt is coming from — some may be made in El Salvador. Others in Turkey. But they do know if it is an import.

Royal Gourmet is based in Atlanta. Or as their website read as of May 28, Atalanta. Their entire About page is a mess.

I phoned their customer service line to ask about their grills. It went to voice mail.

Do you want to know where your tequila came from?

Do you buy locally produced craft beer? Do you prefer it over Budweiser? I bet locally crafted beer is popular not just because of taste, but because people like supporting the local brewer.

Do Californians go ga-ga over farm-to-table cookouts? Yup. Unless it’s a star fruit salad, mixed with jack fruit…then it’s probably grown and raised on a California farm. That’s what makes farm-to-table so appealing. (That and the outdoor Acacia wood picnic tables and candle lit hurricane lamps; I get it.)

Nevertheless, Americans really do like to know where there goods come from, according to this October 2020 survey by the Reshore Institute.

The National Retail Federation does not want them to know. It’s too hard.

Mom: “Kenny, pick up your room. It looks like a cyclone went through here.”

Young me: “It’s too hard.”

Mom: “Okay, then. You don’t have to.”

Seriously?

E-Commerce: Direct to China

A few years ago, the direct to China model seemed more random, like a test drive. Now, this trend is making it so if you are dependent on online purchase orders, you can have them order direct from China. You don’t even need warehousing.

Big e-commerce platforms are increasingly allowing for China manufacturers and third party sellers to sell directly to American consumers.

This new direct American-consumer-to-China-business model is so massive that according to logistics firm SEKO Logistics, e-commerce imports in the first quarter rose over 225% from the same time a year ago. Some of this is due to pent up demand as China was locked down for most of the first quarter last year.

The trend is also propelled by entrepreneurs who come up with a product, hang a shingle online, run a YouTube ad, and all they do is take orders and maybe store some goods in a warehouse.

I bought Xero Shoes after seeing a YouTube ad. They’re made in China.

I bought a special kind of dental instrument I saw on a YouTube ad. The package was from China, the instructions were in English and Chinese.

I bought a scale that measures your body mass index that is now taking a month to come in. I expect it will be shipped from China.

I recently ordered this portable air conditioner from a company called Breeze Maxx. Another YouTube find. Let’s see where it is made, and from where it was shipped. It does not say on its website.

American consumption is essentially an Asian jobs program.

Senator Baldwin isn’t alone in wanting online labeling. Florida Republican Senator Rick Scott joined her. They got their COOL Act legislation into Chuck Schumer’s (D-NY) new U.S. Innovation and Competition Act, which is supposed to be his broad-brush bill on how to outwit, outlast and outplay China.

Letting Big Retail bring on Made in China manufacturers “under the radar” can’t possibly be the way.

Imagine Amazon as a virtual mall. Where you’re mostly shopping is out of an export warehouse in Guangzhou, to put it simply. Or somewhere else in Asia.

“By giving online shoppers information about where a product is being made and where the seller is located, consumers will be well-positioned to support the U.S. economy and create more jobs for American workers,” says Scott Paul, president of the Alliance for American Manufacturing. “It is long overdue that Congress close this loophole.”

Baldwin’s partner on this, Rick Scott, tends to go for the jugular when it comes to China. He’s not a fan.

“We need to cut Communist China off from the American economy that it relies so heavily upon to feed its oppression machine,” Scott says. “Whether we like it or not, we are in a new Cold War.”

No one is telling the National Retail Federation members to ditch its new direct-to-China model. But at the very least, Baldwin and Scott believe, they should give consumers a chance to make a choice of whether they want the Chinese leather boots, the Brazilian ones, or the ones made in Texas. A move is expected on this in the Senate within the next two weeks.

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