Made in USA vs. Made in China: More Actions Needed

Several months ago, I wrote an article about phenomenon of made-in-China products and its impacts on the U.S. economy and the U.S. people’s life. During the research, I was faced with a website named MadeinChina.com which guides businesses around the world to outsource to China and import China products. Some days ago, I ran across website named MadeinUSA.com which is designated to “educate the American consumer on the importance of buying American made products” (MadeinUSA.com, 2011). Examining the looks of these two websites, I have a feeling that we have got problems to encourage Americans to buy made-in-USA products.

The first problem relates to the attractiveness. As you can see in the picture above, MadeinUSA.com website is dominated by words and words. It is easy for an average American to understand what these words means but how can we explore this website furthermore when we guess that there will be nothing interesting other than letters and words? Take a look at MadeinChina.com website, you will have a feeling that there are a variety of contents to explore on it: pictures, numbers, letters and colors. It is true that Americans love reading but they prefer something more than that.
Second problem relates to the contents. On MadeinUSA.com, what the visitors can do include only registering and a patriot, seeing why they should buy Made-in-USA products, exploring the list of registered visitors and learning the purpose of this website. They cannot take more practical actions like ordering a made-in-USA product or even see where made-in-USA goods are available. On the contrary,  MadeinChina.com shows visitors a list of product categories. Image, price and the virtual cart are available as well. Before register to this site to participate in made-in-China movements shown at the bottom of this site, people have already been able to buying made-in-China products as a way to support these movements.
The third problem relates to target audience. If you click on the button named “Company Registration” on MadeinUSA.com, you will notice that this site aims at American businesses who wish to promote themselves by uploading logo, company name and advertisement to this site. Ironically, many businesses may wonder why they should pay $10 or $40 monthly to present on a website whose traffic is ranked 752,144th by Alexa. Meanwhile, MadeinChina.com’s taget audience is much more various: manufacturers, sellers, retailers and buyers. That can explain why this site is ranked 12,525th at the same time.
It is apparent that Americans prefer made-in-USA products to made-in-China ones because they are of high quality, safe and durable, and indirectly supportive to their employment too. Nevertheless, it is hard for them to search for made-in-USA goods in physical store as well as in online store. Therefore, it will be much more helpful if MadeinUSA.com diversify the features of its website to make it a place where buyers and sellers of made-in-USA products can meet each other comfortably.

New Rules Target U.S. Citizens With Accounts Abroad and Noncitizens With Deposits at U.S. Banks

Financial institutions around the world are bracing for new U.S. tax regulations that are prompting some foreign banks to ditch their customers and their American counterparts to worry that they could lose crucial deposits. 

The rules--one of which is being phased in, while the other hasn't been finalized--are aimed at reducing tax evasion by making banks report more details about income earned by customers who keep deposits in countries other than their own. 

Overseas, some banks have alerted customers that accounts will be closed at the end of the year. 

U.S. banks, meanwhile, are trying to quash a proposed regulation that would require them to report interest income earned by non-U.S. residents to the Internal Revenue Service, which could then pass the information to their home countries. Banks in Florida, Texas and California are fighting the effort, saying that it could drain the coffers of banks that rely heavily on foreign deposits. 

Together, the regulatory changes could affect hundreds of billions of dollars worth of deposits in accounts across the globe. While it isn't known what customers will do with the affected funds, some could shift their money to countries that have looser rules on reporting income earned on deposits. 

"The policy objective is to have transparency so that governments can work together to avoid offshore tax evasion," says Manal Corwin, deputy assistant secretary for international tax affairs at the U.S. Treasury Department. 

The new rules are already affecting U.S. residents who keep accounts in overseas banks, which will soon face stricter rules on reporting income earned by those customers. The regulations will be phased in gradually over the next several years, but certain requirements take effect in 2013. 

The rules are part of the Foreign Account Tax Compliance Act of 2010, which applies to individuals and financial institutions as part of an effort to rein in offshore tax evasion. 

Some banks are cutting off their customers. 

Munich-based HypoVereinsbank, a subsidiary of Italy's Unicredit SpA, has sent letters to between about 1,000 and 2,000 clients, advising them that at the end of the year, it will terminate securities services for customers who live in the U.S., as well as for U.S. nationals who live abroad. In the letter, the bank blamed increasing U.S. regulatory pressure, including "heightened reporting and supervisory obligations." 

"The effort just got too huge," a bank spokeswoman said. 

Unicredit and its other subsidiaries haven't done the same, said a person familiar with the matter. 

Bank Leumi in Switzerland sent a similar letter to securities customers last month, saying the law "requires substantial changes in the reporting regime for banks with respect to accounts held by U.S. customers." A spokeswoman for the Israel-based bank declined to comment, saying, "As a matter of bank policy, we do not comment on questions about our clients, individually or in the aggregate." 

This summer, Deutsche Bank AG cut off all service to U.S. citizens with securities accounts after a growing number of regulations made the business a hassle, according to a person familiar with the matter who said the move affected a "small number" of clients. 

In the U.S., banks are fighting a proposed rule from the IRS that would require them to report interest paid to noncitizens living in the country. No final rule has been issued, but banks say they worry that it could drive deposits away from U.S. institutions. 

"This is just a bad, bad idea," says Alex Sanchez, president and chief executive of the Florida Bankers Association. He estimates that Florida banks hold about $80 billion of deposits from non-U.S. residents, representing about 20% of the state's deposits. An IRS spokesman declined to comment. 

Across the U.S., banks held roughly $2 trillion in deposits from foreign companies and individuals as of June 30, according to the Treasury Department. The agency doesn't provide figures on individuals' aggregate holdings. 

Bankers in Florida, Texas and California say that the proposed rule could be devastating for institutions that rely on those deposits. They also contend that many customers keep their money stashed in the U.S. because they are afraid to disclose financial information to their home countries, particularly in Latin America. 

"This is not the time to be looking at these types of proposed rules because it would have negative impact on many financial institutions," says Gerry Schwebel, executive vice president at International Bancshares Corp. in Laredo, Texas. Roughly one-third of the bank's $7.8 billion of deposits would be affected by the rule. 

Ms. Corwin of the Treasury Department says that the proposed rule doesn't represent a significant shift because the IRS already has the authority to request the information from banks. If the change goes ahead, banks would have to automatically provide the information to the IRS, which could then share it with countries that have tax treaties with the U.S. In Latin America, only Panama, Venezuela and Mexico have such agreements. 

"It's a little bit hard for the U.S., which has been at the forefront of the transparency battle, to have this kind of resistance to these regulations, which should not be a problem for people who are properly reporting their tax information," Ms. Corwin said. 

Matthias Rieker and Laura Saunders contributed to this article. 

Credit: By Robin Sidel and Laura Stevens

Black Friday May Not Be so Important as Thought

In a recent article entitled “Black Friday Sales Important to Retailers”, Tucker, Navera and McMacken (2011) stated that Black Friday “can account for 40% of a store’s sales for the year”. This estimate proves that Black Friday has been a decisive source of revenue for years since its existence. However, I am wondering what would happen if Black Friday did not exist, and whether this event is that important to retailers or if it simple that shopping habits of Americans are the key driver of holiday sales in the country.
At the beginning of this research, I listed down some shopping habit of Americans. First, Americans tend to go shopping more before Christmas. They buy a variety of goods, wrap them as gifts for Christmas celebration and give it to their loved people. That must be the reason why retailers’ sales increase in during the holiday season. Second, because they are gifts, they must be durable goods. These goods are available at department store like Best Buy, Walmart, Macy, Target and so on. They are not at food store like Cubs or Kmart. That is why Best Buy, Walmart and Macy are usually ranked at top in holiday sales. Third, Americans tend to buy what they want, rather than what they really need. Clint (2010) argued that “The more television you watch, the more magazines you subscribe to or read, the more money you want to spend on things you don’t really need.” and “Marketers are taught that success comes from selling to wants not needs.”
I am continuing my research on the impact of Black Friday. Americans know that they can buy products on big sales on Black Friday and this can help them save a significant amount of money. Giving gift means spending money and it is never a bad idea to buy goods at lower price. Hence, it is all right to get up at mid-night to queue in a long line in cold. A recent research by Khazan (2011) published on Whasington Post called Black Friday shopper “gift-buying” people. Moreover, this research points out four reason for which people go shopping on Black Friday. However, these four reasons are centered around two emotional factors: togetherness and deal hunting. This means that it is not easy for us to classify Black Friday as an event or just simply a shopping habit.

Adapted from Census.gov

Going through the retail sales statistics from 1992 to 2010 and doing comparison with those of 1967 when Black Friday began it popular, you can see that there is no significant difference in trends of retail sales over the years. Ultimately, I doubt that the Black Friday’s impact on shopping habit of Americans is not as considerable as many may think.

A Bright Future for Green Products

Researches indicate that attitudes of U.S. people toward sustainability issues continue to be improved. In a research entitled U.S. Consumer Attitudes on Green, Richard Matthews (2011) states that U.S. consumer’s awareness of sustainability concept has been improved by 15% from 2007 to 2010. This research also points out that 10% of customers “consistently make green buying decisions”. Before that, a survey by Cone (2009) reveals that 35% of Americans are more interested in environmental issues that they were a year ago. Whereas, a research by Experian Simon (2009) unveils that “65% of adults are making a conscious effort to recycle and more than two-thirds believe that they have a personal obligation to the environment”.

One of the factors that help improve the green attitudes is the enhancement of green technology. In a research entitled The State of Green Business, Makower et al (2011) confirm that investment in green technology has increased by 7.6% in 2010, reached nearly $4 billion. Significant portion of this investment is in energy efficient products, solar energy and bio-based products. The research also shows that clean-energy patents filed with the U.S. Patent and Trademark Office increased by more than 67% in 2010 to 1,882 patterns (Makower et al, 2011).

Thanks to the improvement of green attitudes and green investment, green products are getting more various and available in the market. In the research entitled Measuring the Green Economy, U.S. Department of Commerce (2010) applied green product and service definition to over 22,000 product codes listed in 2007 Economic Census. This means that green products are getting more various in the market.

To distribute green products to customers, retail giants such as Wal-Mart, Target, Menards, Home Depot and hundreds of online stores are now including green goods in their product offerings. Nonetheless, no green retailer or distributor is recognized as dominants of green market. Rather, each seller has its own market place more or less related to its store location and current accounts. This means that green market is still fragmented in terms of distribution.

Higher adoption and higher availability of green product make green business more and more promising. Packaged Facts (2010) estimate that the U.S. green household cleaning sales in 2009 reached $557 million. This market is also expected to approach $2 billion by 2014. Meanwhile, Pike Research (2010) estimates that energy efficient home improvement market was over $38 billion in 2009 and this market will surpass $50 billion by 2014. In the personal care market, Kline Group (2011) estimates that green product sales was about $3.5 billion in 2009 and will approach $6 billion in 2014. Ultimately, all estimations indicate that green business will continue to grow by double digits in the next five years.

Even though these trends and forecasts are subject to change, it is reasonable to conclude that green products have a bright future.