capital equipment

Came across an interesting concept on plant and machinery.

Plant and machinery should be easily accessible and cheap enough such that their costs must stand in some definable relationship to the levels of incomes in the society they are to be used.

We happen to be looking for some polymer processing machines.

The costs for such a machine:

1. In Western Europe: USD 200,000
2. In Taiwan: USD 100,000
3. In India: USD 50,000
4. In China: USD 25,000

This is on the assumption that the plastic processing technology is easy available & accessible in these markets.

I would have hoped Europe to be the cheapest, as they were the pioneers in plastics technology. However they are the most expensive. Makes one wonder whether they realized that as the technology became accessible the prices would fall.

And as we see, Taiwan was the first to embrace the opening up plastics technology.
And their prices are half that of Europe's. However, in light of this Europe has still not reduced its prices!

The other surprise was the difference in prices in China and India, I would have put both these countries on an equal footing for capital equipment, but there is a price difference maybe we Indians are having the same problem as the Europeans.

But, I can't quiet figure out what?

With the opening of technology in a domain, the field is actually being leveled as more manufacturers will begin to produce with access in technology, prices will drop and volumes will increase as the products get available to a mass of people.
So why are the Europeans and Indians charging a premium?

Is it information arbitrage or is it quality?

Actually quality is the shade every businessman tries to pull, I mean with an open access in technology, what quality are these guys talking about. I don't hear the pharmaceutical companies talking about quality when patents are lifted and production is thrown open for wider access. Actually pharmaceutical prices are as good as the newly entering competitions.

So then what is Mercedes or BMW selling, part of it is con part of it is snob value and some part is perhaps quality. Nothing more!