I agree. There is always some risk both when you directly import any good and when there is no local dealer network for that good. However, there are both firm and country risks. I import a lot of goods from North America because the country risk is low, but I was burned once by firm that I had not adequately researched. Even so, I think the country risk is lower from North America than from China. The problem is that the risks you and I face are probably not normally distributed, but take a log-normal or extreme value shape. It is very costly to avoid low probability failures and in the end, the best thing to do is: 1) heavily research the firm you are buying from, wherever it is, because this is how you reduce firm risk (and where i failed) and 2) act very very cautiously when it comes to avoiding country risk. It is generally lower cost to plan on "failures", ex ante, that do not occur, ex post, than to not plan on failures, ex ante, that do occur, ex post.
post #16 of 18
3/4/09 at 5:26am
