Japanese lenses and the Value of the Yen

[graybrick]

<p>I'm thinking of selling one of my lenses. Times is hard, I needs the money, yadda yadda blah blah. I bought it a while back, before the market went nuts. It seems it's now worth more than I paid for it, with the correction in the market driving the yen value through the proverbial roof compared to the dollar (should've investesd in a few of those...). I'm wondering what's going to happen. Will the economy spring back to life in the States? Will the dollar regain some of its lost value? Will the exchange rate return to its prior 'normal'? Specifically, will Canon lenses drop in price in response to economic stimulation in the same way they have recently increased so prodigiously? If I sell high, but can't ever expect to buy low again, what do I gain? This is an open question.</p>

<p>Poboy from Tennessee</p>

[brucecahn]

<p>Nobody knows for sure the future value of foreign currencies. The guys who are best at guessing have gotten rich doing just that. The yen is pretty much at it's low point of the last several years, going for around 90 to the $ today. When things were good a few years ago you got almost 120 to the $. If you have Japanes equipment you don't need, now is the time to sell.</p>

[mark_drutz]

<p>Trying to forecast the economic recovery and exchange rates is a gamble at best. If you get two top economists together you'll get four opinions. If you need the money now, sell the lens now. My philosophy is you make your best decision based on the best information available and then you never second guess yourself.</p>

[tobey_bilek]

<p>If our economy and GNP ( gross national product ) and rate of growth remain low or go lower, foreign currencies will be worth more compared to dollars.<br>

This makes foreign goods more expensive in the US, but the upside is it makes our exports cheaper in foreign lands. That is the theory anyway. But when you have exported all the jobs already that can be exported, there are no US goods to be sold elsewhere. Until the jobs come back, ?</p>

<p>US can not compete worldwide with labor productivity alone. The cost of government is too high and going higher. We will be forced to compete with high tech products that other countries can not make NOW, airplanes, components to computers, wind mills . As foreign countries get capital from our negative balance of trade, they can invest in more capital intensive manufacturing, education for their citizens, and develpment of their own high tech industries. What do you suppose is going to happen then considering there are billions of people in the world who will work for nothing but food as Ross Perot quoted when he ran for president ? He saw the writing on the wall. Everyone else either can`t read or ignores the facts for political expediency.</p>

<p>What the US has that no one else has is land, millions of acres of land to grow food. The problem is farmers used to be 1/2 the population, but it is down to 5%. What are the other 95% going to do ?</p>

<p>The model we have been pursuing since the end of World War Two is coming to an end. I really can`t see a new model to take it`s place. Even if we make wind mills, how long do you think it will take for someone in China to reverse engineer them and sell them cheaper?</p>

<p>These have been shortsighted political decisions designed to work for the short term with no reguard for the future. Both political parties have endorsed it. Third party candidates who would pursue get nowhere. Tell the elecorate you will raise taxes and force a balance of trade explaining how we will be off in the long run and see how far you get. ZIP.</p>

<p>The problem we now face is foreigners will now longer take our trade deficite and loan the US money we can use to finance the debt which is piling up expodentially. It will be painful to wean ourselves off borrowed money.</p>

<p>Then you must also consider whether the economy of foreign countries improves or declines RELATIVE to ours. That is the key, relative. If we both go up or down, price stays the same.</p>

<p>All this relates to how much foreign made goods here will appreciate or depreciate. Roll the dice and see how they come up. I am not smart enough to predict. </p>

[ken_i_h]

<p>FWIW, you may think and lament that US prices for camera/lense has gone up. But the prices in Japan are much higher. <br>

For example, Nikon DX honey 18-200 lense ($1 = JPY92): <br />List price $1200 (including 5% sales tax which no one can evade in Japan)<br />The best price on net $960 (Bic Camera - similar to Adorama)/ $709.95 (before tax) at Adorama.</p>

<p>I am visiting Tokyo later this month and naive me, I thought it must be cheaper in Japan. NOT! Buying stuff here in US is much better off. So, I guess that US market is far more bigger and important than the home market. Will the prices go down if the economy improves and $ gets stronger? I don't know. It seems to me that the US price is already generously priced. I am curious how it is in other regions.</p>

<p>On a side note - I visited B&H this weekend for the first time (been buying online only until now :-) and I was OVERWHELMED by the crowd. I didn't see any "recession" there. I was just going to see and get a camera bag, but I couldn't find any sales staff to help me. I talked one staff who wore staff vest and punching something into the PC terminal on the floor, then he told me that he was not a sales person and that was it. I was half pleased that the camera business is doing okay there and left for Adorama where I bought what I wanted. I mean no offence or disrespect to B&H, but just couldn't wait so long for just a bag. And I don't mean that Adorama was so vacant - in fact it was crowded, too, but my usual sales person was luckily available and helped my out quick. </p>

<p>Well, sorry for so much babbling. <br>

I don't know about the global economy stuff, but this is just my 2 yen for the narrower scope issue.</p>

[jtk]

<p>Japanese companies are bailing out of Japan and it's not because of protective tariffs.</p>

<p>Look at where Toyota and Hyundai build plants...rarely in Japan and not mostly in the US. This is because the Japanese economy has been in the tank for decades now and the temporary post-WWII societal values (subservient, non-aspiring etc) are gone. Pffft. Who would want to employ those people, especially in worn-out Japanese factories? People work smarter and harder in Tenn. than they do in Yokohama and the new factories are far more efficient, employing fewer people, making fabrication costs far cheaper.</p>

<p>Prices of photo equipment have little to do with dollar/yen relationship, they have mostly to do with smart marketing decisions. Manufacturers want to make things that appeal to people with lots of money (or pretend to it, like America kids with affluent parents)..so they retool their designs to make more expensive items more cheaply and they retool their advertising to add hype (digital "features" that add nothing to online and minilab results that are all most "photographers" see, per Nikon D90. Or they simply raise prices because they can get away with it. Who wants to sell goods cheaply when fools will pay 3X for something infinitely cheaper to make (EOS lenses compared to FD).</p>

<p>When Canon abandons the EOS lens mount they will mint money. Nobody important will quit Canon, just a few of the old guys. The new guys will buy the new equipment, the old guys will shop EBay for EOS.</p>

[mark_drutz]

<p>Ken's story about B&H reminds me of a Yogi (Berra) quote about a restaurant, "Nobody goes there any more. It's too crowded."</p>

<p>Photo gear prices are affected by many things and the yen-dollar exchange rate is one of them. They try to keep prices as stable as possible but sometimes they can't ignore changes in exchange rates. One reason the Japanese and Koreans produce cars in the US is to minimize the effects of changes in exchange rates on prices.</p>

<p>The Japanese outsource production for the same reason American companies do, cheap labor, favorable exchange rates, favorable governmental policies, etc.</p>

<p>One reason companies try to create brand distinctions is to give them more control over pricing. A BMW 7 Series is only worth $70-100,000 if BMW can convince potential customers that they must have a BMW instead of a Lexus or Infinity that costs much less. Think of all those people who know nothing about cameras but have to have a high end Nikon or Canon. I don't blame the manufacturers. They're in business to make money not to make the world a better place. If someone is gullible enough to want a camera because some movie star or tennis player is hawking it, it's their own fault.</p>

[jtk]

<p><em>"They try to keep prices as stable as possible but sometimes they can't ignore changes in exchange rates. "</em> <br>

They don't <em>ignore</em> exchange rates, but aren't able to be driven by them if their home economy has collapsed, local politics are threatening, and factories are antiques.<br>

The Japanese have already outsourced MOST of "their" car, camera, and computer production to economically healthier countries (US among them). Exchange rate fluctuations have been inconsequential by comparison to forces such as relative religious/economic/political instabilities, growing western-style middle class in China/India, declining retail markets in the West with consequential effort to market trickier toys in order to squeeze the last blood from the stone.<br>

Manufacturers are inherently committed to higher prices and cheaper production (maximum-robotized die-injected manufacture, maximum digital/minimum mechanical)...ie they are capitalists. Less than price "stability," they are dedicated to "increased prices." The wages and benefits of one employee are secondary to the ability to build ever-more-robotized plants with fewer employees and the political ability to abandon old factories and old work forces. </p>

<p>...among Toyota's reaons for so little commitment to Japan are the Detroitification of Japanese workforce and factories (Toyota's built dozens of factories around the globe in the last half dozen years, including African, and only one in Japan). Another reason is shipping.</p>

<p>In addition to polical wisdom (vs "buy American") Hyundai and Kia are building in the US rather than at home: the investors presumably don't want more money committed to a country at as much military risk as South Korea. </p>

[mark_drutz]

<p>John, I meant stable in light of exchange rate fluctuations. Of course they want to keep their prices as high as possible and I think I said (or at least implied) that in my last paragraph.</p>

 

[jtk]

<p>Mark, sorry, I didn't mean to sharply disagree with you. The topic of this thread involves dollar, as if US prices are driven substantially by some decline of dollar vs yen...and it presumes that Japanese-branded items made in the Tennessee, Phillipines and Puerto Rico for Japanese companies are affected by yen fluctuations.</p>

[mark_drutz]

<p>John, disagreement is a good thing. That's how we learn.</p>

[graybrick]

<p>FWIW, the specific lens I am referrring to here is the 70-200 f/2.8 L, "Canon Lens Made in Japan". Despite outsourcing, this is a product manufactured in Japan and so its value must originate in the Japanese currency. Thus, exchange rates must be irrevocably tied to its original international wholesale value, and will surely play into its retail price. This assertion is not to discount the presence of other factors in the final financial equation, but it seems that the recent across-the-board price adjustment for Japanese-manufactured goods could be attributed to an increase in relative value of the Yen, and all other things being equal this could by itself account for the correction. Taking into account that the strength of the Yen amounts to a price increase on exports in and of itself, this can drive a drop in exports and may further exacerbate the situation as firms are forced to make real wholesale price increases to maintain profitability on a smaller number of sales(who would think that strong currency could be bad for an economy?). I'm no financial anylist, but this has been my take on at least part of the situation. Thanks for the replies so far, this has been an interesting and insightful discourse.</p>

[ken_i_h]

<p>Thank you for starting this thread. It is indeed interesting to see that there are many ways to look at things.</p>

<p>As an amateur weekend enthusiast who happens to have a day job in the financial sector, I think you are rignt. "Made in Japan" means that the major part of the manufacturing is done in "worn-out Japanese factories" by "subservient, non-aspiring " people. And JPN/USD exchange rate certainly has impact on the export prices from Japan.<br>

As you have already realized, that your currency gets stronger means that you can buy foreign goods cheaper. So if you want to SELL something, it would choke you....</p>

<p>Back to your original question - Yes, it is a good time to sell your gear. No, I don't think the exchange rate will come back down any time soon. In fact, it may go up further. Don't ask me why, I just saw forecast by several analysts around. And even if it DID fall down, the price of Canon lense wouldn't fall as quickly or as much, if any, as you may hope. Like I said, US prices seem to be already <em>relatively</em> generous and they tend to want to drop slow (and raise quick). May depend on how competitors (Nikon, etc.) react.</p>

[graybrick]

<p>=</p>

[mark_drutz]

<p>One reason prices do not adjust downwards as fast as upwards is that what's in inventory was purchased at the higher price so retailers are reluctant to lower their price and take a loss even if the loss just means a lower profit.</p>

<p>As I said, predicting exchange rates is a gamble at best. People who do it for a living hope to be right more often than they are wrong. It's like picking stocks. You win some and you lose some. If you're selling your gear you have only one shot at guessing right. If you need the money now, sell now.</p>