Australian Govt Forces Apple, Adobe, Microsoft To Explain Price Hikes
An anonymous reader writes "Live outside the U.S.? Tired of paying huge local price markups on technology products from vendors such as Apple, Microsoft and Adobe? Well, rest easy, the Australian Government is on the case. After months of stonewalling from the vendors, today the Australian Parliament issued subpoenas compelling the three vendors to appear in public and take questions regarding their price hikes on technology products sold in Australia. Finally, we may have some answers for why Adobe, for example, charges up to $1,400 more for the full version of Creative Suite 6 when sold outside the U.S."
Printing the instructions upside down costs money silly.
No they shouldn't. The producers determine the price for Austrailia if they sell there at all.
I already know the answer. It's the same reason Canadians pay far more for the same items in the US even though our dollar has been at parity for years now.
There was one scandal where Bombardier, a Canadian company receiving government money, was charging Canadians more for ATVs made in Canada than they charged in the US. So effectively the Canadian government was subsidizing a company to rip-off it's own citizens.
"Why? Because fuck you. That's why."
difference in pricing models like this encourages piracy.
You talk about that one scandal as if it's unique, there are MANY examples of us paying more for Canadian made products than the Americans do. There was a news article a year or two ago about a specific model of car that was priced more than $10,000 higher at the Canadian dealership across the street from the factory than it was in Hawaii, and best of all, the excuse given was that the transportation costs in Canada were higher!
Thing is, the Canadian government has "investigated" this sort of thing many times, including yet another report that came out just last week. Do you think anything will ever change?
Canadians pay more because... well, because we pay more, that's why!
On some things we can buy online and get the same price as the rest of the world, but if you just can't do that (some products don't work well that way, and the government makes it illegal to do so with other ones, not to mention the companies that flat out refuse to sell to customers outside the US) then you're just screwed.
When you print money to pay off debts the currency devalues and it is a no brainer. THe exchange rates are going downhill as the house wants to debate whether to default or not eveyr 3 months.
Therefore, the Bank of Australia wants a higher percentage to avoid the risk as the dollar is the worlds worst currency right now with the highest risk. ... Well Japan might be tieing the US in this area if the government improves more printing of money.
So MS responds with the 30% premium to convert dollars to Australias currency by passing it on to the consumer.
IT also explains why healthcare costs are skyrocketing up with insurnace, food, housing and student loans while incomes decline. All this free money given to rich by low interest rates inflates the money supply.
Holy shit. It's a real life application of the Chewbacca Defense. This is amazing... :)
Interestingly, one Australian company made the submission that it was cheaper to send an employee business class from Australia to the US to buy a certain piece of software there, stay for a night or two in a hotel, fly back, and pay import and/or GST at customs than it was to get the software locally.
Actually, Valve is mentioned in the article as one that people wanted investigated - but not as one that required a subpoena to provide information. This suggests that Valve voluntarily told them how their pricing works.
Which, as far as I know, is "We set what price the producer wants us to, or they refuse to sell on Steam at all."
slightly different in that due to our public health care system the governments actually legislate the prices for certain drugs.
That is the only honest answer that there is. As long as artificial monopolies like 'regions' are tolerated it will only continue. There is no valid reason why software or other companies should be able to use globalism for cheaper labor whilst denying consumers globalism for cheaper products. I don't see how things are going to change until world governments start demanding better treatment though.
Why are textbooks 1/10th the cost in Indonesia? Why couldn't I buy Top Gear in the US for years when it was available for cheap overseas in the discount bin? Why are Corvette's twice the price in Europe? The list goes on and the answer come back to artificial monopolies charging more because they can. Introduce competition, make grey market imports legal, demand manufacturers honor warranties regardless of the country of origin, allow people to buy software in any country regardless of where they live etc......
The next gen of consoles are going to screw us on digital sales, infact anyone selling movies / games / music digitally in general, I hate to go all tinfoil on you guys but they've proven time and time again, they simply do not care about foreigners.
If you can charge bob 3$ for the icecream and mary 8$, then do it â" especially if you're the only place selling icecream now. Only bob is America and we're mary.
To take it to 11 on the tinfoil mode, when things become all digital "they" will have control, full control. EA have already proven just how evil digital control is, go find a GOTY edition of Mass Effect 1 2 or 3. They don't exist. You think you're getting a bargain when you buy Mass Effect 2, a 50$ US PC game for 5$ on a Steam sale? Awesome! (Well you are, it's still good) but the DLC is on THEIR controlled internal store and it's ONLY on their store and do you think the DLC is marked down to 10 or 15% of the original cost like the full game? Ok what about 20%? or 30%? No. Not only is it extremely rarely marked down, when it is, it's a small amount (I think it's been on sale twice, in nearly 3 years)
The console manufacturers are sadly GOING to region lock us when it's all digital and they WILL charge us more than Americans. Interestingly we probably wouldn't even notice or care if it was 20 years ago and we didn't have American buddies posting on the same forums or links to deals or reddit threads or whatever saying "holy crap, I just got a sweet God of War 4 deal on the PSN store for only 9.99" â" except we'll click the link "not available in your region" or "on special, this week only, 49$ AUD"
Australians need to be prepared that this whole digital thing IS going to shoot us square in the wallet, then the face. I'd wager good money on this.
Long story short, region free PS3 took me from being a dodgy pirate to someone really happy to purchase games, I'm happy to pay 20 to 50$ US a game, no qualms - hell the Americans do it, don't you? Except they frequently try to stiff us from 95 to 120$ US a shot,....... it's unreasonable, it's bullshit and unacceptable.
Even worse is on digital stores online, they detect my IP and the price for a digital product of 1's and 0's is 30 to 100% more. It's _incredibly_ frustrating as almost any foreigner could tell you.
Long story short? You think this is bad now? Just wait, soon there won't BE steam "gifting" from your American pals, there won't be a US PSN store to log in to with PSN credits you purchased on Amazon, there won't be stores which will ship you foreign region free games. There won't be a G2play where I can buy a cheap key of Diablo or Starcraft cheaper than the Blizzard online store or retail. Why would Blizzard, EA, Ubisoft provide these 3'rd party 'stores' keys to sell?
Australians, in my opinion we're actually in the peak part of bargains right here, in 2011/2012/2013 and maybe 2014 - we've got fairly cheap international shipping, we're in the mid retail -> digital conversion so everyone is clamouring for our buck. Soon the loopholes will be closed, the infrastructure, policies, design all in place for a single store for companies and bam. Kiss the awesome times we've had goodbye. :/
Finally, most stores won't do deals like Valve, they seem to be one of the few with respect for the customer, we're in for a bad time
I think the problem is that the manufacturer's use globalization to pick and choose the cheapest components, and the cheapest labour form anywhere they can, and then turn around and deny their customer's the same thing by region locking things, writing contracts prohibiting their dealers from selling to people out of country, and all sorts of other BS that they themselves don't have to deal with.
If "Free Trade" applied to customers as equally as corporations I don't think anyone would have an issue with a company pricing things however they wanted, wherever they wanted. It's the fact that I often am not allowed to pick the cheapest location that bothers me.
[Steam] producers determine the price for Austrailia if they sell there at all.
Then these producers should "appear in public and take questions regarding their price hikes".
I think you are right. I would also mention a couple of other reasons: 1) the difference could stem from the need to have extra personnel that work just on regulatory compliance for that country (depending on the business, there may even be ITAR export compliance issues). 2) There is also the currency conversion RISK. You have to price your product high enough above the normal fluctuations to ensure that you don't lose out on currency conversion (this is more than on a daily basis, think like quarterly or yearly). Setting the price sufficiently high prevents having staff to continually evaluate and re-price all your products. This idea affects the United States Mint selling bullion coins directly to the public. They set their prices much higher than the premium on spot gold/silver for bullion to ensure that they don't have to continually re-price and to ensure that they don't get burned.
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No they shouldn't. The producers determine the price for Austrailia if they sell there at all.
This is similar to the philosophy in China. Everyone watches the latest Hollywood movies and uses the latest software. If the price is low enough they may decide to actually buy the legitimate copy instead of the bootleg. It sure is great when the government doesn't get involved... gotta love the free market system :).
. . . it's because they have to translate their product into a weird foreign language. Right?
These are my friends, See how they glisten. See this one shine, how he smiles in the light.
Sounds cool.
Except, our government is actively engaged in writing treaties to prevent anyone outside the United States having the freedom to do anything other than pay us.
In short, you're an ethnocentric nationalist who easily justifies anything that screws the outsiders.
And, you make a nationalist like myself look bad, just by breathing.
"Windows is like the faint smell of piss in a subway: it's there, and there's nothing you can do about it." - Charlie Br
You could stop buying the products. If enough people find the offenses of these companies egregious enough and stop purchasing the products they will change their behavior. You have to be willing to do without it though, not just pirate it, or they will blame the piracy as the reason they are losing business instead of their crappy model.
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Shortages? May want to leave that part out. Just focus on the black markets. And the pirates. Lots and lots of scurvy-ridden, peg-legged pirates.
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It's not that non-US prices are higher, it is that US prices are made low. This is because Americans are cheap bastards even though many have lots of money to spend. It is a big market, but one you can only break into at discount prices. On the plus side, it is easier to offload low quality goods to the US. Many companies are learning fast and sending lower QA-scoring product runs to the US, sometime even seperate products for specific low-quality US chains like Walmart. However, if your products are new or susceptible to review, or cheap enough to produce copies like software, you send the quality stuff and lose out on per-unit profit to get a share of American consumerism.
As a consumer in the long term, I wouldn't try rushing to emulate the US. Sure, you can get bread and cheese there at a super low price, but on the other hand you're likely to end up eating cheeze whiz and wonder bread.
You might want to research your info a bit before you start spewing Fox talking points.
If you'd bothered to check when a Republican last balanced a budget, you would find that it was in 1957 under Eisenhower. Obama, in his last term, increased the debt/GDP by ~10%. If you look at Reagan and Bush Jr, both of them had terms that increased the debt/GDP by over 25%.
Don't believe me? Google "which republican president balanced a budget?". You might learn something.
Help I am stuck in a signature factory!
It is cheaper to fly to the US for some IT week-long training courses, stay the week plus weekend than a similar course attended locally. Cheaper including accomadation, food and flights as my colleague at work has experienced. Maybe we are meant to see the price gouging as opportunities to see the world.
Canada and the US share a boarder, so it is somewhat ridiculous for them to charge more in Canada than in Hawaii, that's a fair complaint. However, what I think is even more ridiculous is a car that's made in South Australia, the Pontiac G8 is cheaper to buy in the US than in South Australia. The average price in South Australia is around $50,000 the average price in the US is around $30,000. Remembering that the dollar was at parity or close to parity. This means it was $20,000 cheaper to purchase a car that had been shipped to the US. GM has consistently done this to us, and just about every large company does this to us.
Valve actually doesn't do it that much, though some game producers that use Steam do.
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Hi there, I've got a degree in economics, you're wrong. That shit's retarded.
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Simply don't enforce any copyright laws against these products until the pricing reaches parity. "Authorize" a local "distributor" to sell it at the cost of the blank media it is distributed on. Make sure businesses are aware that they can get in on this action too, and that any copy acquired in this manner will be free from any future prosecution of copyright infringement. If the companies don't play ball after that, Australia suddenly becomes a much cheaper place to set up a small business... win-win.
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While I have no love for those companies, I wonder if the answer to your questions isn't going to be obvious (and annoying). It's "known" here in the US, that Europeans are willing to pay more for the same goods, and thus we charge them more for the same goods. Americans are known for choosing to buy cheap crap that will break in a week because it's cheaper, therefore more reliable vendors have to go lower to make the sale. Going to the farthest extreme, the Chinese are known for stealing software, movies, etc. and thus to make a sale there the price has to be very low.
They call this "market based pricing", and I agree that it is actually quite a destructive practice, but I don't think it's illegal.
Tyres at $900 each are obviously at the very premium/niche end of the market - either high-performance or unusual size (or both!) .. I have the same experience ... In fact, that is about as niche as you can get without trying to get Pirellis P-Zeros for your Gallardo (or equiv sports car scenario)
Sad reality is they just don't sell enough to be economical but instead of not offering them at all, they make them reflective of the actual costs.
Your typical Commodore/Falcon or small hatchback tyres are basically the same price as the US and recall that we pay substantially higher wages all the way through the supply chain and have higher overheads like property costs for warehouse, transporting tyres, etc
The really odd thing is a current hard line Republican would see many of Eisenhower's policies as outright commie talk.
Their are no local support costs, The companies mentioned use global support operations not local ones so support costs are actually identical to the US. Distribution is mostly digital and where it isn't the cost at worst is a couple of dollars to ship it to a store. A premium can definitely be justified, but it is not remotely possible to justify the premium currently being imposed as anything other than a FUCK YOU.
Yet Windows 7 is Windows 7, doesn't take much more to sell/support it in the UK/Australia/etc vs in the USA, why does it cost so much more? Delivery is dirt cheap, support can't justify a 200% cost surely!
It's not like the hardware is made in the USA and shipped to Australia, it's all made in the same Chinese/Asian factories and shipped over the Pacific anyway! Australians buy the same TVs/Computers/Cars (when we can get a decent model on the market) as the USA does. Sure, we're a smaller market, but that cost differences are Immense!
Um, what is the typical VAT in the US?
I think it's about 0%
you're an idiot. the US equivalent is sales tax.
and while they're too stupid to mark it on their prices in shops it's still there.
world was created 5 seconds before this post as it is.
You know what, you're right! That $5000 spread across every Australian customer definitely does equate to 50% more per copy!
http://www.classification.gov.au/Industry/Journey/Pages/CGnonA/Step3.aspx
Aussies don't like price fixing, which hasn't been suggested, and they don't like be 'gahzumped' either. A similar problem happened 25 years ago when people realized that CD cost pennies to make and $20 each to buy. The music industry claimed it was the cost of innovation and something 'for the artists'.
The sad truth being anti-American politicians don't last very long in Australia, so our pack of officially elected cowards will do absolutely nothing.
The only thing they did in response was to modify their online web shop so that Australian customers could only see the AU$ price and conceal the US$ prices out of shame.
Software AND hardware costs about twice the price in third world countries, it DEFINITELY does not cost less.
They don't just have to pay to get the classification. They have to pay lawyers to do the paperwork, accountants to handle the financials, service and support to handle refunds and disputes, and so on (not to mention the managerial overheads). It wouldn't surprise me if these costs exceeded $1 million.
Don't get me wrong - I'm not saying that the prices are always justified, and I'm sure that there is a big "because we can" factor as well. As an Australian, I too have been outraged on more than one occasion by the price that we have to pay for goods in comparison with the US. However, my day job (which admittedly involves hardware, not software) has given me an appreciation for the amount of actual effort required before you can start selling something in another country, and the company needs to recoup that cost somehow.
--- "When you're strange"
Historically, the AUD has been worth about 0.75 USD (click on 10 year). It wasn't until the global financial meltdown that the AUD shot up in value to where it surpassed parity with the USD (Australia's economy wasn't hurt as much because they didn't have a housing bubble at the time, though they have one now). If you compare before and after, the AUD increased in value by about 40% against the USD. If you compare the software prices, they too are about 40% higher. Surprise, surprise.
When companies conduct business internationally, they usually negotiate a fixed exchange rate for a year (or a quarter). It helps insulate their annual financial planning from fluctuations in the currency markets. So when the AUD first shot up, the vendors importing US software still had to pay 1.3 AUD per 1.0 USD, even though 1.3 AUD was now worth closer to 1.4 USD. The next year when they went to negotiate currency exchange prices again, the US companies said "OMG! You want a 40% price cut? You can't be serious!" And the Australian vendors didn't have purchasing power to negotiate a better deal. So year after year they got shafted with prices based on pre-2007 exchange rates. (In the US companies' defense, they probably argued that if the AUD shot up 40% in a year, it could drop 40% the next year, and they weren't willing to take that big a risk and adjust the exchange rate by that large an amount. But it's unconscionable that it's continued for 5 years.)
And yet if I was to go overseas and buy as many copies of Photoshop as I can fit in my bag, jet back to Oz and resell them it is illegal.
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Ten years ago my parents bought me a video camera, they were on holiday in the USA. A few months later it broke. Panasonic UK refused to service it (even if I paid) claiming that it was not one of their products. Basically they were protecting their extra margin because these things were sold at a higher price in the UK than in the USA. This is short termed thinking - I will avoid buying from them ever again.
Companies like globalisation - they make goods where it is cheapest and sell the same stuff at different prices everywhere. But if we, the consumer, try to do the same they stop it. There is an inbalance of power, large corporates abuse it. We like to think that we live in a free market, we do not.
The Aussie power plug is the most likely case for things to cost more. Anything that can be plugged in need a C-tick which is just like the FCC testing but it requires more paperwork and the standard is very slightly different. Other things have unique standards such as a kitchen faucet has to be certified to the local standard. Many of these standards are voluntary in the US under the UL approval process but are a legal requirement to follow an expensive, unique AS or ASNZ standard.
Cars have to be crash tested for the local market.
Local sales and support costs are far higher since local staff costs are much higher than in the US since minimum wage jobs there are often $20 to $30 an hour here. The cost of everything is higher so staff that can demand it, do want far more money. Construction costs are some of the highest in the world.
Local inflation is driven by a requirement that 9% of all employees money gets dumped into mutual fund like retirement funds that are simply trying to out gamble everyone else and not really invest so they are throwing around money like crazy.
The real issue is that land prices are hyper inflated and simply insane. The makers of Autocad have an office an hour drive away from down town sitting on land worth 10s of millions yet the same office in a almost rural area in a US city might cost nearly a million dollars. The land prices mean rent is very high and there are examples where the 2rd largest mall in town spent over a billion dollars to upgrade so basic economics say the rent of the smaller stores need to increase by at least $20,000 a month. The Costco built in Melbourne was the most expensive one in the world and far more expensive than the ones they have built in Tokyo.
You seem to be under the misguided belief that costs determine prices. In the real world, that's only rarely true,
Microsoft, Adobe, etc are not charities like the Raspberry Pi foundation; they adjust their prices in order to maximize their profits.
In an ideal scenario, competition would lower the prices. There are many reasons why this doesn't happen in this market, but you can thank government-granted monopolies like patents for a big chunk of that - it's kinda hard to compete when you can't even implement FAT on your OS without paying Microsoft.
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And your misguided belief is that this is "right". Oh, and don't go and reply to me with a lecture on the difference between business and right, or fairness and unfairness, or ideal scenarios, or any other bullshit. Don't go on about shareholders and the company's responsibility to their shareholders, or that it costs more to transmit data to such-and-such-country (that's definite bullshit as far as Adobe et al. are concerned anyway), or that "business is business", or that "businesses exist to maximise profit". All bullshit. Oh, "they're not a charity?" No, of course they're not. That doesn't answer the question though: "If they can make a profit in the US by selling the digital product for $200 [made up price] then why cannot they make a profit for selling it at the same price -- currency adjusted -- in any other country?" Oh, "support" I hear you think. Think again. They are profiteering. No more, no less.
Fuck that, we (australians) are rich, we'll keep on buying (cr)apple stuff and get reamed up the arse, regardless.
I know what you are saying is the correct thing to do, but the public just won't. I think australian history is a big part of it; we actually have never had to fight for anything, well maybe kill off the natives, but we don't have any great revolutionary tales, nor critical events where australians had to fight for their rights or seriously risk invasion; we also don't really get taught about other nations plights (like the US war of independence, or french revolution) probably so that it doesn't give people ideas, we're just told we're the lucky country and most people are happy little vegemites as a result.
Mod parent insightful. Tax and market conditions do account for some differences, but not that drastic. Often this situation has to do with over-reaching copyright, trademark and other legislation that allows companies to enforce region pricing.
Go to Dell's website. Compare the prices in various regions, incl Aus. The prices in Aus are generally close to double what they are in other regions. Double. Seriously, double. When I worked out in Asia, it was cheaper for us to get someone to buy them elsewhere and fly over with them.
And before anyone says that tax in Aus is high, and it's expensive to ship to there, that includes any import duties and the cost of the flight.
On top of all that, you still have to deal with Dell.
"Willing to pay more" is not the same as "don't have a choice except to pay more". I think that's what this is all about.
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Move location? That's a stupid answer. The correct answer is you stand up for what you believe is right. If you don't stand up for what you believe in (i.e. run away to China as you suggest) then you are a coward. Not only are you a coward but you relinquish your right to have an opinion and believe in that opinion strongly enough to fight for it. Nice answer apart from that.
I'm an Australian, and I pay more for technology than people in other parts of the world including the US. This is kind of a pain in the ass, but I have to admit that if it wasn't worth it to me I wouldn't pay. Our currency is really strong at the moment, so in general imports are very cheap and local goods/services are very expensive, and we really pay very little for technology in relative terms.
I sure wouldn't want other countries which buy our imports to say to us "wait that's not fair; it only costs you guys $40/tonne to export iron ore and we're paying $150/tonne. We're going to get the government involved to try and fight that somehow".
To that I would say "the value of something is whatever its buyer is willing to pay for it" and we have to be consistent in that.
// MD_Update(&m,buf,j);
They are profiteering.
No shit. No one was claiming otherwise. However, last time I checked the Australian government was pretty conservative and the country is pretty wealthy with an extremely low poverty rate. That makes it a goldmine.
Laissez-faire has its costs. This is what happens when you charge whatever the market can bear, a market that can handle a heavy load, such as Australia, will get charged a premium. In countries like China, where these companies have to compete with free pirated software and cheap bootleg hardware, prices are bound to be substantially lower (not to mention the fact that China is lacking in economic freedom, so their government would have a much easier time intervening if foreign companies were attempting to gouge their upper class).
Don't blame these companies for playing by the established rules. Here in America we get fucked by these same companies in a different way: for the most part, they don't pay taxes. But I blame the system that allows them to do it, not the companies themselves. If you think this is "bullshit" then you should take active measures to oppose laissez-faire capitalism -- don't cry like a little girl about it. Don't stonewall your mind to any logical arguments that may oppose your claim of "bullshit," at least make a cogent argument as to why it's bullshit.
"From the depths of my skeptical and rationalist soul, I ask the Lord to protect me from California touchie-feeliedom."
Why can they sell it to the "poor people" (your words) at a much cheaper price and still make a profit? But if you're "richer" they sell it to you for more. Does that make any sense at all?
It's no different than here, in America, where you can go into a convenience mart in the ghetto and get the same things you would in a convenience mart in a wealthy neighborhood except much cheaper. When I drive through the ghetto I fill up my tank b/c gas is always cheaper (along with everything else). It's called capitalism. Removing these inequities requires government intervention and there are often negative consequences that go along with that. I'm a socialist but I don't blindly support government intervention in all things -- if I were to do that I'd be the strawman conservatives love to attack.
"From the depths of my skeptical and rationalist soul, I ask the Lord to protect me from California touchie-feeliedom."
_that_ is the problem.
Australia can make this a lot easier by changing the rules:
0) it's totally legal for people to import and re-sell stuff they buy legitimately elsewhere in the world
1) anyone bringing software in from the USA can easily pay sales tax on it before reselling (no other import duties though)
2) the manufacturing company isn't allowed to disadvantage the user merely for using software / product in Australia
#2 is hardest to balance. In the case of Microsoft,
-refusing to activate windows would not be acceptable.
-Saying that you have to get customer support on the standard usa numbers in usa times would be acceptable.
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Australians buy the same TVs/Computers/Cars (when we can get a decent model on the market) as the USA does.
No, you don't.
On which side of the road do you drive and where is the steering wheel located?
Which Analog and Digital broadcasting systems does Australia use, it's most certainly not NTSC/ATSC, so you can't leverage the "we buy the same stuff as Americans" because you don't. You have to have your OWN models specific to a country no where near the other English speaking countries in the middle of a huge ocean.
And even with digital stuff, you don't use the same spelling as the US and you have a Wacky media rating system that makes no sense.
So yes, they're going to charge you more...because you're a tiny annoying market. You're damn lucky you're english speakers with a reasonable standard of living or else they'd just ignore you.
Only if you start shipping Smarties south of the border.
And there is a very high cost to having a Walmart in your town. Low wages, no or poor health benefits shifting the costs to the taxpayer along with the massive tax incentives they receive that other local businesses can't get drive local businesses out of business. Whole towns have been decimated economically by a Walmart moving in. And when they become the only employer a town has, that town will always be at the mercy of Walmart.
Might I suggest the following for you:
http://www.youtube.com/watch?v=Jazb24Q2s94
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But because it's also upside down you don't easily notice the difference.
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These companies do the same with the Canadian market (costs are usually 30% higher) where we do have the same standards as America. Usually these companies don't bother to fix their spelling and often measure things in US units.
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