Dixon Ticonderoga

                                                                Name         : Hsu Myat Waddy                                                                              ID No        : 579-9613

Batch        : 13

Case Question 1

Dixon Ticonderoga, the second largest pencil manufacturer in the country, was popular for No. 2 yellow pencil. The 1990s, Dixon Company has been become to prove very difficult decade.  The reason is consumers don’t want to buy pencils. Because of pencils prices in the United States has soared. After that, Dixon suffered the problem due to the Chinese manufacturers. Their problem was the Chinese pencils entered the market with low-priced so Dixon cannot compete with them. What is Dixon Company responsible? They fought back and arguing that the Chinese manufacturers were import dumping pencils to the U.S market with reduction costs and moreover they lobbied the U.S government for maintenance. In my opinion, the reasons for cost advantage in Chinese pencil production are as follow;

• Cheap Labor
• Raw material
• Price inflation
• Interest rate

As we know, China is the highest population in the world and most factories are used to be operating with unethical method. They used cheap labors and it doesn’t fair for labors.

Due to the country of rules, labors cannot suffer fair and better working conditions. As of using cheap labors, their production of pencils costs is lower than the other countries costs. Comparing with the U.S labor, the U.S produces the higher production costs and they give the higher salaries for labors.

Not only using cheap labors but also using cheap raw materials in China can be lower compared with the U.S quality productions. In fact, Chinese factories don’t want to produce the pencils with modern design so they can maintain the others overhead cost.

In conclusion, if the people want to set up a company in China, their interest rate could be cheaper than th U.S. Therefore, we can control our financial investment for the companies. That’s why, the Chinese Company operating costs are lower than the U.S.

Case Question 2

In my opinion, lobbying the U.S government to impose antidumping duties on importer of pencils from China is not a good way to protect U.S jobs. However, the U.S government enacted antidumping duties on Chinese pencils, Chinese importers didn’t stop to import to the market. From 1991 to 1999, U.S manufacturers shipped the quantity of pencils are 2.4 billion down to 2.2 billion. At that time, there are many exporters in the market. Among of them, Chinese importers are leading the market whose import tariffs are rise from 16 percent to over 50 percent of the market. Chinese kept making pencils cheaper and better. And also Chinese industry continued to lobby the government. For Chinese importers who import the pencils to the U.S market must be paid for their imposing import tariffs sometimes to the tune of 53 percent on some brands. The reason is a company who sells its products to the other countries with the lowest price that a company will not have any competitors. Furthermore, the pencil industry and all workers connected with that industry stand to benefit from antidumping laws. By imposing the duties have not controlled China exporting the pencils to the country as they manage the cost of the duties being paid by reducing their costs. The U.S government was benefited, but the consumers cannot effort to buy the pencils with higher prices and feel dissatisfied. Moreover, they will suffer due to such exorbitant tariffs. Thus, the government must be take alternative policy that firms need to set up foreign subsidiaries to take some advantage of some of the low costs. That means a company which wants to reduce their low costs should be corporate with their foreign subsidiaries and to operate with other organization. In additional, Chinese industry should be set a fair price so that it can be compared with other importer countries for the price of pencils. That’s why the government must be changed new policy.