Gear. Photographers go crazy over new lenses, lights, cameras, and all the ancillary parts that go with them. Many of us have added to our bags during this holiday season, and a few are holding off for those big purchases still. What if I told you that the prices of lenses, lights, and other equipment may be going up 25 percent or more in only a few months?
President Trump, as divisive as his term has been for the USA and the world’s political standards, does state a valid reason to some of the policy positions being taken specifically in regards to the business relationships between the USA and China. The political rhetoric may lose some of these reasons in translation but it can’t be ignored, because of the consistent headlines across so much of the media today. US-based businesses lose, maybe more than they gain, by working with China’s manufacturing companies.
The main culprit in the issue is based on patents and intellectual property (not so dissimilar to the value that many in our industry place on copyrights) and the loss of control over this IP. China routinely requires any company that seeks to use the country's manufacturing businesses to use a joint venture process, which inevitably gives up the control of the intellectual property of that company to China. This is not willful by the company with the intellectual property per se, as China is breaking the rules of being a member of the World Trade Organization (WTO) in this instance. These requirements are usually agreed to in secret to allow the outside company to have access to the lower cost of manufacturing available there while attempting to avoid international penalties from the WTO. Just for US-based companies, this theft of IP is an annual loss of $225 to $600 billion annually according to a United States Trade Representative (USTR) report.
With the USA and China being members of the WTO, the USA routinely moves against China in IP and patent theft through WTO's preferred process. Both countries enter into an arbitration period called an MOU (Memorandum of Understanding) for a three-year period while China "attempts" to remove the IP from the marketplace. After three years, the USTR will identify any ongoing violations and another MOU is created and so on and so forth. For those not in a socialist country or familiar with the structure, China oversees all businesses operating within its borders and has the capability to remove a company from the marketplace. Essentially, violators are rarely sanctioned by China, which continues to benefit from the IP theft as a nation (and their sum total GDP), while other countries and international businesses lose significant sums of income due to “knockoffs” and other iterations of products and processes now in China’s hands through the theft.
China has continuously flouted the agreements it’s made to be a part and party to the WTO and its other member countries. That’s a very rudimentary breakdown of the trade issue between China and the US, so the question to ask is: “Why should this matter to photographers?"
In the past several years, many verticals of equipment that are standard in the photographic industry have moved their manufacturing to mainland China. Many creators and artists have rejoiced at the level of gear available to them now that not so many years ago was economically out of reach. The drive down in pricing has been as much due to the lowered manufacturing costs as it’s been to the economics of competition. Some would say that the pricing of certain products, especially from China-based companies, are artificially lower due to the lack of competition within that country while the amount of goods are flooded into the US. These products are then sold against equipment that may have had major research and development costs to absorb in its final pricing to consumers. China and therefore, the companies operating within its borders, have none of these upfront costs to create their goods and therefore lower their own costs, as they can immediately begin the manufacturing process and skip the entirety of development, which decreases the knockoff product's final price.
It takes time, energy, talent, and a level of determination not many have to create something brand new and see it to market. Some of the best entrepreneurial stories are based around the idea that the entrepreneur has to overcome monetary and personal struggles, including the naysayers, and take sometimes years of research and development for a product to come to market, which may benefit an entire community. There are a number of these types of people in the photographic community, but it also means we see what most likely is stolen IP from companies attempting to piggyback off the entrepreneurs' hard work, and these tools are embraced by many photographers as well. Many times, these products are reviewed and compared to the original and then given a value statement if they are worth the lower cost while deemed that they accomplish a modicum amount of what the original does. That lower cost is built on the back of the original product, and that entrepreneur now has to compete with their very own IP and patents.
This scenario is a reality for many small businesses that need a large volume of product(s) to be manufactured to become a functional and profitable business, as well as to pay for those initial upfront and startup costs. That manufacturing, while required to get the business started and the gear into your hands, may very well make them go out of business eventually. That loss of control over their IP is a part of what the China and US trade war is about.
Currently, $200 billion in imports from China have already had a 10 percent increase in tariffs since the beginning of the trade war this year, with another $267 billion in goods imported from China to be added to the list, with an increase up to a 25 percent tariff coming sometime in March 2019. This date has moved the past several months, but the likelihood of this eventuality is becoming much more cemented in reality as well as the tensions growing between both countries. Unless the US were to back down, the tariffs will go into effect, and an increase in final costs will become our new normal in the US. The other possibility is that China starts to defend IP at its own personal loss, while a majority of products produced within China start to become more expensive to the world as a whole. In this second scenario, photographers everywhere will be paying more for equipment, not just US-based creators.
From century stands, to lenses, to light modifiers, there are not many facets of photography that are not touched by China’s manufacturing. While some equipment will be staying at or near the same price points, because it is imported from Japan, Taiwan, or Switzerland, many other pieces of gear will be going up in pricing if the China and US trade war does not resolve soon or escalates further. Either way, maybe that new lighting kit or modifier setup should be on your list to get sooner rather than later.
Stay up to date with the current policies by checking the USTR website here.
Lead image by Carlos Herrerro, used under Creative Commons.