Your firm is a paper converter. It converts paperboard into various articles for use in homes and restaurants for food preparation, sale, and storage. Its products include pizza boxes, ice cream boxes, baker and deli boxes, and paper plates as well as boxes and trays for use in fast food operations. You purchase paperboard from both domestic and foreign sources. Recently, a Taiwan supplier has begun offering paperboard at extremely low prices – far lower than what you have been paying domestically. One of your colleagues at your firm calls the offer “too good to be true.” You have always had reliable sources of supply, but the offer is very tempting. Please answer and expand on the following questions:
1. Why might the foreign exporter be cutting prices to U.S. customers?
2. What information do you think you need before committing to a purchase? Specifically, what pricing information do you need?
3. If it turns out the products are being “dumped” in the U.S. market, what would be the result and how might it affect your firm and your purchasing decision?
4. Do you think it is fair or unfair for an exporter to dump its goods in a foreign market?
5. Evaluate the statement, “Selling at a low price can’t be unfair.”