Hi All

Having been in the industrial equipment market for 30 odd years, can I
make a few points about 'cheap' power tools and just why our Chinese
friends can make them so cheap.

A huge part of the cost of a new product - Bosch with the jigsaw, Skill
with the circular saw, is development. Not just the huge cost of
developing the tool, but developing the market for it.

If you look at the progress of any product in marketing terms the
initial sales of a new product will be low - people resist new ideas
and it takes time to get new products accepted. You don't make any
money at this stage.

The sales graph then starts to grow rapidly and this is where you stick
on an absolutely huge margin and make mega bucks.

Sales will then level off, your margin will drop a little, but is still
good and you get steady sales, but no growth. The product is a cash
cow in marketing terms.

If the margin came under pressure, you could only lower production
costs by cutting back on quality of materials.

With most products the sales start to decline for various reasons; the
product is replaced by new technology (typewriters for example) or it
becomes a 'me too' product that everyone is making.

Some industries encourage this, the motor trade for one. Dawoo were
tarted up Vauxhall Astras. Vauxhall sold the rights & machinery and
moved on.

Many other industries do the same thing. Italy was the first 'cheap
producer' of power tools, compressors, welders, cleaning machines etc
because their labour rates were lower.

Now look at the Chinese. They only make copies of other peoples
products. No product development, no market development, no huge
investment whilst waiting for the return, no marketing to create a
brand.

They don't make original items, they make 'me too' products - often
passed on by European manufacturer's who have moved on.

Add to that the huge difference in labour rates; monthly wage that
compares to a European hourly wage and no wonder they can make stuff
cheaply! They don't have to cut material quality to cut costs!

Another factor comes in, the rise of the huge retailers and especially
the 'hard discounters' like Aldi, Lidl, Netto. These people have major
market shares in Europe, but struggle in the UK because of our high
brand awareness (read snobbery).

Suddenly the retailers can shift the huge volumes the low cost
manufacturers need.

Simple facts are; that cheap Chinese power tool from Aldi was probably
once a top of the range brand manufacturers pride & joy. But due to
overheads you will find the same product at different prices.

It is now entirely possible to have power tools that are made cheaply
but not cheaply made. You may be buying old technology, but there is
no reason to suspect inferior quality in every case.

Three year warranty a marketing ploy? Possibly. More often that the
cost of manufacture in a low wage economy exceeds labour rates and
transport costs in a high wage economy.

Dave