This weeks Corporate Scamster words are: Channel Stuffing.
Channel Stuffing= Channel Stuffing is the practice of sending retailers more product than they can sell. It is used by big Corporations (and not so big ones) to manipulate their sales figures. The idea being that if the product has left the factory floor the sale has been made and the sales figures are artificially raised to satisfy share holders.
The problem with this practice is of course that if the retailers can’t sell the product that the figures will drop dramatically in the future. A little channel stuffing in a temporary glitch might be something that will solve itself but what if the economic situation is so dire that there is no way the retailer can sell the overproduced product?
We’ll have front row seats to watch the collapse of such a Ponzi scheme in the very near future and for your sake I hope you have withdrawn whatever financial interest you might have in China because it seems that China as a Nation is now one big stuffed channel while the rest of the world is holding on to what little money they still have .
Zero Hedge covered the topic of automotive channel stuffing long before it became a conversation piece, particularly as it pertains to Government Motors, a story which has recently taken precedence after being uncovered at such stalwarts of industry as German BMW and Mercedes, implying the German economic miracle may, too, have been largely fabricated. Another core topic over the years has been the artificial and inventory-stockpiling driven (in other words hollow) “growth” of China’s economy, whose masking has been increasingly more difficult courtesy of such telltale signs of a slowdown as declining electricity consumption and off the charts concrete use. It was only logical that the themes would eventually collide and so they have: the New York Times published “China Besieged by Glut of Unsold Goods” in which, as the title implies, it is revealed that China is now nothing more than one big “stuffed channel.”
First, we find, what has been painfully obvious to anyone holding an even modestly skeptical view on the Chinese centrally planned economy.
The glut of everything from steel and household appliances to cars and apartments is hampering China’s efforts to emerge from a sharp economic slowdown. It has also produced a series of price wars and has led manufacturers to redouble efforts to export what they cannot sell at home.
Just like in the US, and Europe, the Chinese government is, gasp, lying about everything:
The severity of China’s inventory overhang has been carefully masked by the blocking or adjusting of economic data by the Chinese government — all part of an effort to prop up confidence in the economy among business managers and investors.