Globalisation in a nut shell

Three experiences in a span of couple of hours over a post Christmas shopping trip in and around Oxford Street – left me with a wonderful taste of Globalisation. These three experiences, are actually not something big, they are just average day to day experiences that any one of us have and often don’t merit a second thought. However on reflection, simple experience like these often give a view of things to come while the world economy moves ahead in the current path.

Experience 1: Browsing for a Samsung LED TV.

You would have noticed that the latest LED Smart TVs and the more recent high definition TVs have pushed the old cathode ray TVs into oblivion into the age of the dinosaurs. The amazing clarity of the picture and the internet enabled smart features of the new LED TVs, leave all of us convinced what a pleasure it would be to own this product and have it at home!  Looks like every one wants one of these nowadays. Have we not seen fights breaking out in Thanking Day sales over LED TVs? However, the most amazing thing is not just the quality, but the price. Something like this would’ve cost us a fortune, but thanks to Globalization, a 40 Inch version of it with excellent features and picture clarity is available round about GBP 500 in UK. This leads me to the first main feature of globalization – It makes majority of the junk stuff and occasionally wonderful products available for a fraction of the cost.

Experience 2: Shopping for a Sauce Pan.

Walking through the long aisles of shopping centre space, leaves me wondering why has the world become so complex and why do we have so many products manufactured in Asian factories that are variations of sauce pans but doing essentially the same thing – heating up food? The bewilderment of choice was cut short by sheer disbelief when I came across a boxed set of Le Creuset Cast Iron sauce pan set of three, on sale for GBP 250. Examining it further revealed that this was about 11 kg of cast Iron (approximate raw material cost: 1 GBP per kg of Iron), that has been value added to shape it into three sauce pans for GBP 250 in a factory in France. Obviously, I am not attempting to trivialise the quality of the product or the heritage of this piece of cookware, but this leads me to the second feature of globalization – manufacturing any “stuff” in developed economies costs a ton and is simply not cost effective.

Experience 3: Two course dinner for two at a regular Mexican restaurant.

After queuing up to get a table in a very large but regular and busy Mexican restaurant in city centre, we ended having an amazing two course Mexican dinner over an hour and a half. The dinner for two costs GBP 50 including service and drinks – a good satisfying meal with a lot of feel good factor added in! But this leads me to the third feature of globalization – something which can only be done locally inside a developed country (like a service or restaurant) – will cost a ton and thus will make the local economy further uncompetitive.

So there you go, it appears that globalization has played a significant part in pricing pretty much all of the below day to day experiences.

  • A bright and shiny LED TV for GBP 500.
  • A box of three sauce pan for GBP 250 and
  • A dinner for two for GBP 50.
The hard question it leaves us with is – should a good meal for two in an average restaurant cost one-tenth the price of a good LED TV? Are we justified in pricing three sauce pans for one-half the price of a good LED TV?

 

I don’t have the answers! But, to summarize, globalization has a positive effect of making wonderful products available cheaply, however it achieves this primarily by hallowing out the manufacturing jobs out of the high cost countries. The developed world compensates for this loss by focusing and subsequently raising the cost of services which directly punishes its own people and in turn makes itself further uncompetitive. Isn’t it about time people in developed world pause and think harder about their own purchasing behaviour and prices?