It is time to claim victory and call off the boycott... and why boycott is often a bad idea

The Carrefour boycott seems to be sending a signal to its German counterpart. Meanwhile, the LVMH "kow-towed".

Size does matter. An a limited scale boycott demonstrated the China consumer power. The Chinese citizens seems to have won a small battle in the game of boycotting buff with the West. But it is hard to see who will win the war in the longer term.

Simple economic: free market economy values choice. The more choices you have, the more opportunity you will find a better deal.

As a result, any boycott in trade, whether it hurts your target or not, hurts yourself first.

That is why I always think boycott, any kind of boycott, be it Chinese product, Olympic, Carrefour, are stupid ideas. Threatening of a boycott is also in general a bad idea, though there is occasional exception -- i.e., if you achieve your objective before you begin to hurt your own interest. The American have palyed this game on "Made in China" for quite a while, only in very isolated cases it worked.

So it is time for the Chinese citizens (and netizens) to claim victory and retreat. Carrefour is (1) innocent and (2) surrendered. There is really no point fighting again. Continue the boycott will not only hurt both side, but worst of all, it will convince Carrefour that it does not really matter what it does (see earlier post of why you should tell the truth if you really want to help the Tibetans)

If they still find themselves energetic, then bluff at Mercedes-Benz/BMW, or Walmart. But the games of bluffing are dangerous, they could backfire. Because anyone who is calling for a boycott of any kind, remember there are a few conditions that need to be met
  1. A specific result (which is achievable). e.g. a clarification announcement from Carrefour's major sharehold Arnault is one, something which violates WTO rules is not
  2. You need to be able to materialize your bluff. It seems Arnault yielded before we could see how large the impact on Carrefour could be. Apparently the capitalists does not want to risk even a single cent of revenue
  3. There is cost in any kind of boycott. So the calculate your cost before carrying it out. Usually your cost is higher than the cost of your target (anyone venture a proof?)
  4. If your bluff is called and couldn't be fulfilled. Then you can never bluff again. (e.g., the Schumer-Graham Bill)

p.s. The fact that I do not buy Luis Vuitton because I think it is over priced is not an act of boycott, but an act of expressing my personal choice.

p.s.2. Why boycott is a bad idea

While I agree with Jin Jing on not boycotting, I do not agree with her reasoning (I also disagree with those who disagree just for the sake of disagreeing with the angry netizens, they have become angry netizens themselves by saying so)

  • Jin Jing said boycotting Careefour will hurt its employee's, this is not quite true
  • (1) A limited boycott will only hurt short term profit, not the employees, assuming Carrefour started as a financially sound company
  • (2) Boycotting Carrefour mean purchasing somewhere else (the demand is still there), so whoever laid off by Carrefour could still find job in, e.g. Walmart, as revenue is shifted there and so is the job opening
  • This works in parallel to Americans(or French) boycotting Made in China goods, the factory may shift to Vietnam but the demand change is usually small (unlesss price is changed significant)
  • In the end, the consumer (whoever limited himself with less choice) is the one who suffer (most), as he is seeking a less than optimal deal

Having said that, there are other reasons not to boycott Carrefour. Carrefour's operating in China, assuming it is reasonably successful, means it has contributed to China by bringing in competition and hence skills. As a result, the Lian Hua/etc needs to play catch up (and it could poach managers Carrefour trained). In the longer run, perhaps this would stimulate a strong retail enterprise from China (maybe Lian Hua or Jingkelong/etc).

-- this is, in addition to Carrefour helping the Chinese consumer to get better service and price from the retailing industry.

So, think thrice before you boycott.

1 comment:

Anonymous said...

Carrefour is (1) innocent


Isn't that enough?