29 August 2019 | 12 Comments
If you’re an American company that makes products in China, by the end of 2019 it’s likely that the US government will earn at least a 10% tariff on all products you import from China.
I’m not looking to discuss the problems tariffs present, nor am I looking to start a political discussion. Rather, I’d like to share a few thoughts, solutions, and strategies.
Also, importantly, for many types of products, there currently are no tariffs. So I’m speaking in hypothetical terms that I truly hope will remain that way. Just in case they happen to products you make in China, though, here are a few considerations:
- Nathan’s insights on the Pandasaurus Games blog. Nathan recently wrote a brilliant and comprehensive post about tariffs that I would highly recommend. I can’t even begin to recap it, but if I had to pick a few sentences about what they’re considering, it’s these: “How would we react to a 10% tariff as an established company? We would likely do what almost every established company is doing. We would eat it. We would eat the 10% tariff and not pass it along to you. We would eat the additional risk in hopes that it’s temporary…. We’re talking to producers in Vietnam, and the US, and Europe, and Taiwan, and Malaysia.”
- We already ship a significant number of games not through the US. Combining direct orders from distributors, games we produce for localization partners, and new products we ship to fulfillment centers in Canada, Australia, and the UK, I would say that around 40% of our inventory never even enters the US. Thus it’s not subject to a US import tax. It would be imperative for us to continue this strategy.
- We would need to find a compromise with distributors. Publishers sell to distributors at a 60% discount, distributors sell to retailers, and retailers sell to consumers. My hope would be to find a solution with distributors that may involve a slight reduction in that discount–enough to maintain sustainability for both Stonemaier and the distributors. Most importantly, it would be a small enough adjustment that it would not impact consumers at all.
I understand that these solutions vary vastly depending on the size of the company and their strategies. For example, if a company has successfully managed to be sustainable without traditional distribution (using Kickstarter, Amazon, and other direct-sale methods), they may have considerably more flexibility than a company like Stonemaier. It really depends.
If you have any solution-driven thoughts about this topic, I’d love to hear them in the comments!
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