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The business of imported Chinese implements.

 

The business of imported Chinese implements.

I'm going to tell you a little bit of a story, a process that I've gone through here over the last six months, diving in and understanding the business of Chinese imported implements. It probably is no surprise to you that a lot of the things that you see stacked up in metal crates like this are not built in the United States. A lot of these things are going to be built overseas, slapped into these metal frame crates, packed in shipping containers, and sent across the ocean from all kinds of different countries of origin.

Got to level with you here a little bit on the business side. Something that I was working on and ultimately abandoned. It's, given that we have a big online presence, you can ignore the number of implements that show up online, and eBay and Amazon and Google shopping and all over the internet, dumped out on Facebook, you name it, at really incredibly attractive prices. Prices that a company like us, and we're dealing mostly with your domestic manufacturers, are frankly, you can buy some of these things for less money than what we can even buy good quality implements for wholesale. There's an attractiveness to this, right? A lot of us like to be able to save the bucks and get some deals where we can. Some of these less expensive implements offer that. So, I took several months and investigated to see what it would look like for Messick's to start to offer some of these product lines. To go direct to these overseas manufacturers, buy those things in bulk, pack them into shipping containers and send them here to us.

Got to level with you here a little bit, and let you under the curtains a little bit on some of those exact numbers of what those implements really cost, and what it would look like for a place like us to sell them. Explain to you ultimately why I made the decision not to do this. Start here at the very beginning. So, I'm looking mostly at suppliers coming out of China specifically, as unsurprisingly this is where the cheapest of cheap tends to come from. There's a handful of fairly big companies at this point over here, who engage in this kind of business. You'll simply go through their product catalog, much like you are shopping for an implement yourself. We're kind of doing very much the same thing, just buying it a little bit larger quantity. Go through, pick out what you want, ask what color you'd like to have something painted in, and maybe supply your stickers and stuff to them.

They'll go through the process of manufacturing those things, pack them into a container and send them overseas to you. Now, this at first sounded really great. When you go through and you look at the pricing of all of this stuff, a rototiller, for instance, I can get a chain drive rototiller viewer cost on something coming out of that factory at about $525 for a rototiller, unbelievable. Less than half of what I'm going to pay to a domestic company in order to get a rototiller like that. Once those things have been ordered and they're cutting that bulk order, they're all packed into a shipping container somewhere in the neighborhood of 70 to 80 of those are going to fit into a container, and then sent overseas. Now, you're going to pay somewhere in the neighborhood of about $3,500 in order to get that container from China to a port in the United States. 

So, you figure that out, being somewhere in the neighborhood of about $50 a unit. Continue to run the math here. Now at the beginning of this process, when I first started looking, there weren't additional tariffs slapped on China on this kind of stuff. Agricultural implements and stuff were generally kept in a classification where you weren't paying extra tariffs on that. But Trump did change some of that. A little bit of those tariffs was slapped on. Eventually, there was an extra 25% charge in there, that had to be accounted for as well, which pushed that cost up a little bit higher. However, there was a retailer, when you looked at what these things are actually selling for, you look at that cost on that rototiller, the going price for that piece on your marketplaces and stuff online, is still nearly double what dealer cost is.

So, your retail price for that $525 tiller coming out of the factory in China, still to you can be $1,100 a piece. Ultimately, you're going to be having a bunch of expenses to the retailer through that, in terms of oftentimes free or discounted shipping, and percentages that are paid off to Amazon or eBay or whoever. But there's still some kind of margin and meat left for the retailer in that space. So, I was still a little interested. But I kept digging. The next step that we started looking into would be, what would the parts support look like for implements like this? This is where we first started to really get a little concerned. Now, we're an organization that we're going to sell, and this business is really based upon relationships. We're not a one-time box sale, wave to you when you go, bye type thing.

We are selling parts, providing service, and doing additional implements and that kind of stuff over the lifetime of the equipment that we sell, with the relationships with the customers that we build, and being able to support products is really important to us. Initially, in the first orders that went in for this stuff, there was no expectation from the retailer at all, that you were getting any amount of parts supply. None at all was initially provided. Now, when I went through and started inquiring further, you could go through and get a couple of wear items at phenomenally inexpensive prices. It was unbelievable. Think tines for tillers or knives for flails, maybe a gearbox, maybe a belt, but that was it. There was no consideration given at all for pins or bolts or hardware, or mounting brackets or skid shoes or greasers or bearings, none of that kind of stuff was offered at all. 

If you took the step further and you went and asked for an owner's manual from them, oftentimes implement owners manuals are going to have a page in the very back that gives you the parts breakdown of the machine, and the part numbers, in order to order the individual bits and pieces. There was none. There were no parts catalogs available at all. That, for us, started to be extremely concerning, in our ability to be able to sell this kind of stuff, and then ultimately be able to properly support it, is just quite simply not there. Short of buying one in pieces or dissembling a standing unit, there was just no way for us to be able to continue to provide a meaningful level of part support. The next thing that we stumbled upon here is something that's very relevant to us as a business, but maybe not necessarily you as an owner.

That was liability protection. Now, when we go through and you're buying something, you're not necessarily thinking of the, what could happen, the what ifs. But for us as a business and all the transactions that we're doing, and the fact that we're selling machinery, and we're selling things like PTO shafts and gearboxes, the what ifs and protecting ourselves and our company from those possibilities, are pretty important to us. When you're dealing with a company like this, that's bringing in things from overseas, the person that's importing things into the company is considered the manufacturer, and has the same amount of liability as if they were actually making that piece themselves. This is different than us, say taking a company like Land Pride. Land Pride implements are made in Kansas. There's some kind of lawsuit, liability, whatever, they're going to be involved because they actually manufactured that piece.

We just necessarily sold it to you. That's different though, in the case of me importing something. So, if we bring things in from overseas, sell that piece and something flies apart and injures somebody, there is nobody on the hook for that, but us. I have this sneaking suspicion that a lot of the companies that are engaging in this kind of activity are not taking care of that possibility. I wasn't willing to sit and hang my livelihood out on the quality of a Chinese rototiller. Unfortunately, I believe a lot of people are. We sat and looked into the cost of actually properly ensuring liability for implements like this, and the cost was astronomical. Over the course of 10 years, you would have more than paid for the implement itself, just in the necessary liability protections to be the ones selling it.

So, understand with this kind of stuff, if you ever had to go after somebody because something really went wrong, I think you're going to be a little disappointed by the ability of those companies to actually stand behind a product in a liability sense. So, you probably can guess that I wouldn't be presenting this in this way, and especially around this lot of crates if the stuff that's here wasn't a little bit different. These things are not domestically made implements. This gray stuff here is a lot of things from Titan Implement, not Titan Attachments, which sells the Chinese stuff from a nondescript warehouse. This is Titan Implement, who's an actual implement manufacturer, who does bring in some stuff from overseas. Del Marino rototillers over here out of Italy. We have some Rossi Sickle Bar Mowers from Italy over here somewhere else. We bring in and sell a lot of things that are made overseas. 

However, these relationships are a little bit different than when we're just going to say China and bringing in something ourselves. These are all domestic companies, so even domestic companies that are going to have a distributor-type relationship here. So, take Del Marino for instance. Really good quality Italian-made stuff. We all know that Italy makes really good agricultural attachments. But a company that also has some domestic warehouses and domestic parts support and proper parts catalogs. Even Titan bringing in this kind of stuff, some of these tillers and stuff they bring in from India. They're still going to have domestic warehouses here with those parts supply chains in place, and the proper people to go to for support and domestic warranty coverage if something goes wrong. So, these are companies that actually have some infrastructure and distributorship here in the states, that we work with. 

For me as a retailer, and I think for you in a lot of cases as a customer, we shouldn't discount the value that these companies bring by having these kinds of stateside relationships. The internet culture and the efficiency of capitalism and retail. Everybody is always trying to squeeze all the expense out of things that we can, and there is an endpoint that you reach there that's not necessarily positive, where you start to give up some things that you really probably should be valuing. As a retailer, I understand the value of a company locally here in the states, that provides a warranty. That might have service people that we can call if we're seeing a rash of bad gearboxes, for instance. Or a company that we can go to if something doesn't perform exactly like it should, where a return might need to happen.

Or domestic part support. I burned up some belts on my foil mower the other day and can make a phone call and a day later have them sent over from a local distributor with local parts supplied. So, those kinds of things are the kind of support, the kind of long-term customer experience, the things that you start to value in years five, six, seven, 10, 20, of owning an implement or an attachment. That you may not consider when you're looking at that cheap price tag for the Chinese import, with virtually no stateside support. So, in summary, I don't want to totally discount the place that these things have taken in the marketplace. Obviously, there might be a customer use case that can be made for something that is essentially disposable at a very low price point. But I thought it was worth sharing the explanation from a retailer like ourselves, that cares about long-term ownership and what that actually looks like, and share a little bit of the numbers and the perspective in the business sense that revolves around this interesting sphere of disposable imported goods.

It was eye-opening to me and something that I was extremely excited about at first. I thought it would be really cool to be able to use this platform and show off this stuff, and have some of these bargain type implements. While we're happy to sell stuff to you, and we're shipping implements further away than we ever have before, we're going to stick to doing it with those quality brands, with the ones that we know where it comes from, and we have a relationship with the people that build it. Local IVA sprayers, companies like Land Pride, [inaudible 00:12:34] and Bradco. It's not going to be the cheapest stuff that you're going to find out there, but it's stuff that we can sell in good conscience, knowing that it's going to serve you well for decades.

 

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